# Taxes
## Overview
Taxes are determined by government entities based on the location of the retail site; each having their own unique requirements as to what it and is not taxable. Because multiple governing entities may collect tax for a specific area, multiple taxes may apply specific items within a transaction.
For each tax that applies to a given transaction the system keeps a separate subtotal of taxable sales and applies the tax at the transaction level.
## Using Taxes
In the POS, taxes for a given department or PLU item are already configured and normally require no special handling on the part of the cashier. The system may automatically treat certain taxed items as non-taxed items when items flagged as food-stamp eligible the configuration are purchased with food stamps.
### Tax Exemption
There may be circumstances when items normally taxed in a transaction should be sold as tax exempt: sales to tax exempt organizations or purchase for resale. Each situation has its own requirements and cashiers should follow in-store policies and procedures before tax exempting any purchases.
{% hint style="info" %}
*In order to legally increase the tax basis of the transaction without increasing the before-tax subtotal, use of this feature may involve additional requirements such as on-site signage. Compliance with those additional requirements is the responsibility of the merchant and/or enterprise.*
{% endhint %}
{% hint style="info" %}
*From Verifone Commander Release 56.00, POS Sales Functions security settings configured in **Configuration Client > Security > POS Security > Sales Function Security > Tax Exempt (TEX)** are applied for this function.*
{% endhint %}
1. Touch the line item that is to be exempted from tax
2. Touch **Add Tax Exempt**to exclude the line item when calculating taxability for this transaction
When the security setting for Tax Exempt is changed, do a refresh configuration from **Configuration Client > Tools > Refresh Configuration**for the new security setting to take effect.
## Configuring Taxes
### Tax Rates
Use **Store Operations > Payment > Tax Rates** to define up to eight tax rates.
| Field/Button | Allowable Value/Function |
| --------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Name | Enter the name of the tax. This name appears in reports. |
| Delete | Click to delete the selected tax. |
| Adjust Break Points | Click to Adjust Break Points. See “Break Point Table.” Adjust Break Point appears only if “Use Break Point Table” is selected. |
| Indicator | From the drop-down menu, select the character that prints on receipts to indicate that this tax was applied. |
| Tax Rate | Enter the tax percentage for this tax if the Break Point Table is not being used. |
| Percent Start | Enter the minimum dollar amount that may be taxed (0.00 – 99999.99). |
| Options Prices Include Tax | Select if the price of an item already includes this tax. |
| Prompt for Exemption | Select to make a prompt appear that requests cashier verification when the \*\*\[TAX EXEMPT]\*\*key is pressed. (If not selected, the terminal automatically removes this tax when the cashier presses **\[TAX EXEMPT]**) |
| Use Canadian GST Canadian GST Settings Reg Number Options Fuel Includes Tax | Select to use Canadian GST. Enter the registration number. Select to include tax for fuel. |
| Use Break Point Table | Select to use the Break Point Table and click Adjust Break Points. See “Break Point Table.” |
### Break Point Table
Use the Break Point Table form to define tax break points for sales amounts when a flat sales tax does not apply. The amount of tax charged depends on where in the table the taxable amount falls.
Before setting up the Break Point Table in SMS, obtain the state, county, or local tax table for which you want to create a break point definition. By entering data from that table into a worksheet you can determine the following:
* The starting point.
* The tax break points and the repeating pattern.
* The limit of the tax table, if there is one.
In addition, you need to know the tax rate to apply to sales above the break point tax limit (if there is a limit).
#### Example Worksheet
Following is a worksheet used to determine the information above for our example Break Point Table. You can see that the pattern repeats every six increments.
Number
Start
End
Difference
Increment
1
.11
.17
6
1
2
.18
.34
16
1
3
.35
.50
15
1
4
.51
.67
16
1
5
.68
.84
16
1
6
.85
1.10
25
1
7
1.11
1.17
6
1
8
1.18
1.34
16
1
9
1.35
1.50
15
1
10
1.51
1.67
16
1
11
1.68
1.84
16
1
12
1.85
2.10
25
1
To define the Break Point Table:
{% stepper %}
{% step %}
On the **Tax Rates tab**, select a **Tax Rate Name**and select **Use Break Point Table**.
{% endstep %}
{% step %}
Click **Adjust Break Points**to open the Break Point Settings Table.
{% endstep %}
{% step %}
In **Min. Taxable Amount**, enter the starting point that you previously determined. For this example, .11 is the starting point.
{% endstep %}
{% step %}
In **Repeat Start drop-down** menu, select the desired repeat start point.
{% endstep %}
{% step %}
In **Repeat End drop-down**menu, select the desired repeat end point.
{% endstep %}
{% step %}
In **Options**, check **Table is for All Amounts**if the break point table covers all sales amounts and taxes never revert to a flat tax and do not enter an amount in “**Tax at Flat Rate above this Amount**.”
{% endstep %}
{% step %}
In **Break Point Table ID**, select and click the **Break Point Table ID**to enable to add a new or modify existing Diff and Tax Inc.
{% endstep %}
{% step %}
In the **Break Point box** (lower right), enter the difference (Diff) between the start and end of break point #1 prices. For example, enter .06. The table automatically computes .17 as the end of the break point.
{% endstep %}
{% step %}
In **Tax Inc**, enter the tax increment, such as .01 (The tax percentage usually increases by .01 cent per break point).
{% endstep %}
{% step %}
Click **Delete Break Point** to delete the selected break point.
{% endstep %}
{% step %}
Click **Accept Changes** to accept the changes made.
{% endstep %}
{% step %}
Click **Cancel Changes** to cancel the changes made.
{% endstep %}
{% step %}
Repeat **steps 2 through 9** until you reach the point at which the pattern repeats, that is, the point where the difference and the increment begin again (See the Difference column in the “Example Worksheet.”)
{% endstep %}
{% step %}
Click **Save**.
{% endstep %}
{% endstepper %}
## Reporting
### Tax Report
#### Report Details
* **NAME**: Name of the tax as assigned in the Tax Rate Form. Each of the following report items repeat for each tax defined in the Tax Rate Form.
* **TAX-RATE**: Value entered in the ‘Percent’ parameter in the Tax Rate Form for the tax name.
* **ACT-RATE**: Actual tax rate percentage collected against the total taxable sales for this tax name. The following equation is used to calculate the actual rate:\
Actual Rate = (Taxes ÷ Taxable Sales) x 100
* **TAXABLE-SALES**: Sum of all item prices that were taxed by this tax name.
* **TAXES**: Sum of all taxes collected for this tax name.
* **NON-TAX SALES**: Sum of all item prices not taxed by this tax name.
* **REFUND TAXES**: The total amount of taxes deducted due to refunds.
* **SALES TAXES**: The total amount of taxes for all sales.
* **TOTAL SALES TAX**: Net amount of taxes collected. This number is the total sales tax amount minus the total refunded tax amount.
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