Tax Exempt Category

This field is on the Codes tab of Inventory Maintenance. Click the Tax Status hyperlink to access this field.

This field is intended to be used as a Category Type in a Tax Override Plan to identify items for which the customer is tax exempt based on the POS lockin store. This feature helps you sell items which are taxable items, but for some customers (i.e., farmers), they are tax exempt. To set up this feature, do the following:

1. Set this field to a single-digit value that makes sense. You can use a number or letter, such as F for farmer, in the stores where that item is tax exempt for a farmer, and leaving it blank in the stores it is not tax exempt for farmers. Note that the item’s tax exemption eligibility is determined by the state in which it is purchased. For example, if a farmer purchases from locations which are in different states, an item may be tax exempt in a store located in one state, but not exempt in a store located in another state.

2. Create a Tax Override Plan using a 0% tax code, and selecting type R-Tax Exempt Category. When asked for the Tax Exempt Category, type the code you entered in Inventory Maintenance in step 1.

3. Assign the Tax Override Plan in Customer Maintenance to each farmer.

Example of a Tax Exempt CategorySKU 100, a Fence Post, is tax exempt to farmers in Indiana, and not exempt to farmers in Illinois. Store 1 is in Indiana and Store 2 is in Illinois. SKU 100 in store 1 has Tax Exempt Category set to F. SKU 100 in store 2 has Tax Exempt Category set to blank.   
Tax Code E1 with rate 0% is for store 1’s tax exempt sales. Tax Code E2 with rate 0% is for store 2’s tax exempt sales. Tax Code E is set up in MTX as a ‘By Store tax code with tax code E1 linked to it for store 1, and tax code E2 linked to it for store 2.
Tax Override Plan “FARM” using Tax Code E contains Tax Exempt Category for value F.  This Tax Override Plan is assigned to farmer 12345 in Customer Maintenance.  When farmer 12345 purchases SKU 100 from store 1, since the Tax Exempt category on SKU 100 for store 1 is set to F, it posts as non-taxable and the tax exemption signature are required, and these non-taxable sales will be recorded to Tax Code E1.  When farmer 12345 purchases SKU 100 from store 2, they are charged tax because SKU 100 in store 2 has a blank Tax Exempt Category.