Alt.Tax Classification field on Header Billing of Sales Order

[Former Member]

We currently utilize Vertex to determine taxes on our Sales Orders. Once in a while we need to override the result we receive from Vertex on an individual sales order. It appears we can enter "0" in the Alter. Tax Classification to remove taxes which have been deteremined from Vertex on a specific Sales Order. However if the ship to customer comes back as tax exempt...but they request to be charged taxes on this particular order when I enter a "1" in that field taxes are not redetermined. My user is insisting that before our ECC 6.0 upgrade they were able to enter a 0 or 1 to drive no taxes or taxes on an individual sales order. As I said if I enter "0" on a ship to customer that is taxable it will remove taxes but if I enter "1" on a tax exempt customer it will NOT add taxes. Thanks for any suggestions of what needs to take place or if anyone knows this is the normal SAP behaviour in ECC 6.0. Maybe it was broken before????

[Former Member · Accepted solution]

Hello Sheila

Try this first.

Enter an order for a tax exempt customer. Before saving go into pricing and check the tax code for the condition type UTXD or XR1 in the details screen (Magnifying glass), it should be 'O0'. Now go into the header/Billing Document tab and change the alt. Tax Class to 1 for the customer and check the condition details again. In my case it is changing to 'O1' and we are on ECC 6.0. And I think it should change for you too. If it is changing to 'O1' and still the tax values are not coming, then it is your set up of Tax codes (FTXP) where it is possible to set manual rate or make the tax code tax irrelevant (properties). May be someone tampered with FTXP. If FTXP setting is good, then you need to see if Vertex is returning wrong results because of product code ( normally it should not) or for any other reason.

Let me know how it goes.

[Former Member · Accepted solution]

My Code coming in is O5.... now I'm really confused. Everything you wrote made sense...but I do not know where the 05 is coming from?

[Former Member · Accepted solution]

Did it change after you switched the Alt. Tax class? First establish that.

As to where it is coming from it will be from the Condition record- master data for UTXJ (vk13) and for the combination of customer and material tax classifications.

Tax code O5 is for custom software License, may be it is checking for License and finding it? May be this license works like tax exemption license? Since customer is tax exempt by virtue of having a license, may be you can't override it? Don't know how it works in Software industry.

[Former Member · Accepted solution]

The O5 code is coming in before I change the Alt.Tax Classification and it won't change after I change the Alt. Tax Class. Let me look at this mterial and see what it is coded for in the material master. Do you utilize Vertex or a Tax Boldt on?

[Former Member · Accepted solution]

Hmm. That's an issue. It should change when you switch the alt. tax class, unless have set up UTXJ record to lead to same code for both customer tax classifications as shown below ( I don't think so)

Customer tax class Material tax class Tax code

1 5 O5

0 5 O5

Yes, we do use Taxware but let me tell you this is not coming from there. Tax code is internal to SAP, the only thing is we can do is changing the interface to include additional data and/or change the tax code properties by using user exit in the function module: EXIT_SAPLFYTX_USER_001.

[Former Member · Accepted solution]

Here are my setting for this specific material:

Customer tax class Material tax class Tax code

1 1 O5

It seems strange that I can change a taxable customer to tax exempt but I can't change a tax exempt customer to bill taxes. I'm not sure why you said "O5" was software. My description in my system of "O5" tax code is Output Tax All Levels (LXUS)

[Former Member · Accepted solution]

Well

If you are testing with Exempt customer the customer tax class should be 0 and not 1. Check the customer you are using for the test. Also check how your UTXJ condition record is set up.

In any case if the alt class change is not affecting the tax code, I suggest you raise an OSS message with SAP. May be it is an upgrade issues for all you know.

With regard to the description O5, that's what I see in my system. It is possible that it has been changed in my system or yours. I am wondering why will somebody do that for standard supplied codes. But that's a different topic.

[Former Member · Accepted solution]

All of our customers are set up with a 1 whether they are exempt of not.... we take what Vertex sends back and that seems to be fine. I did try sending an OSS note before but they said it was a consulting question... in other words I would need to pay. I will try again and this time word it a little more simply. Thank you for all of your helpful hints... it has helpfed!

[Former Member · Accepted solution]

Now you are telling me something. May be the issue is in the interface, especially jurisdiction determination.

Sorry I don't want to bug you but if all of your customers are set up with a 1 and you take what Vertex returns, why change the Alt Tax class? in the document?

Now I suggest the following:

1) Read US tax config guide issued by SAP Labs. This note will guide you to get it: 392696 - R/3 Tax Interface Configuration Guide.

2) Test the Vertex tax data retrieval as outlined in the guide with your problem data for

a. Jurisdiction code determination

b Tax calculation

c. Tax update

3. Check FTXP settings for all relevant tax codes - if they are set up with rate % and the properties- Product code and tax relevancy indicator.

4. Check if you have enhanced the Function module- I talked about it before- EXIT_SAPLFYTX_USER_00.

5. Review these OSS notes:

983526 - EXIT_SAPLFYTX_USER_001: new field EXEMP_IND

1172696 - Wrong ship-to jurisdiction after note 1133924

81761 - Tax exemption and certification number for Ship-to- Applicable to old releases but may throw some ideas

302998 - Collecting fields for user-exit

Hope this helps.

[Former Member · Accepted solution]

Thank you again for all this information. I had mentioned in my very first explanation that once in a while a tax exempt customer will ask us to bill them taxes on a specific sales order. I questioned this and I was told that sometimes our distributor or dealer may be selling to a customer that is taxable and needs us to charge them tax. Not sure of the exact situation but again they are an exempt customer who only wants to be billed taxes on this specific order.

I do have a question in regards to one of your comments:

"then it is your set up of Tax codes (FTXP) where it is possible to set manual rate or make the tax code tax irrelevant (properties)." I do not see a setting int he proprties to do this...can you be more specific which field in the properties of the tax code you are referring to.

Thanks once again,

Sheila

[Former Member · Accepted solution]

Pardon me if I sounded terse, that was not my intention, I am trying to understand the scenario and help you as much as possible.

With regard to your question, in the properties window, you will see the field 'Relevant to tax'. This is the one I am talking about.

You will see the some explanation in field help but a more detailed one exists in the config guide I talked about in the last post, here is what it says:

Blank or O - External system decides if transaction is non-taxable vs. taxable. External systemu2019s taxability decision engine will be used.

1 u2013 External system assumes transaction is taxable. Therefore, external systemu2019s taxability decision engine will be ignored and tax rates will be based solely on jurisdiction codes.

2 u2013 Call to external tax system will be bypassed during tax calculation. SAP will impose zero rates and zero amounts.