Why use default State Sales Tax Codes?

Setting up default state tax codes allows Paradigm to automatically adjust the sales tax on an order just by checking the ship to address. This comes in handy if customers are buying the product and then having it shipped out of state, so then the state tax doesn’t apply to them anymore. Because it is based on the ship to address, the person doing order entry will not have to make an effort to charge sales tax for each order. By default, the tax will be that of the selected customer, but if the state tax codes have been set up, entering a ship to address will cause Paradigm to change the sales tax on the order to that of the selected state.

Setting up default State Sales Tax Codes

To set up the state taxes, go to Accounts Receivable > Sales Tax Collected > State Defaults. To save time, set up a state with the configuration of codes that is the most prevalent in all states. After doing this, click ‘Add All States’ and Paradigm will create entries that are set up identically to the first entry, for all states. After this, change the Sales Tax 1 for your state to your state’s tax code.

Any states that need a tax code different from the original state that was created will have to be changed as well. When an order is created and a ship to address is given to it, this is the list Paradigm will check to see what tax codes get applied to the order. The Job Tax fields in the State Tax Codes list are used for Jobs and Job Transfers only.

To disable Paradigm from automatically selecting a tax code for any customer who gets taxed the same regardless of what state he is in, go into the customer’s detail tab and uncheck the box next to “Auto-Select tax code by ship-to-state”.

NOTE: Paradigm will never replace a 0 tax rate with a positive tax rate. This means out-of-state customers should be set with default tax codes from your state, ensuring that when the customer picks up from your location that they are still taxed (if no ship to address is selected).

Note: When using state sales tax codes, it is necessary to set any Ship Via’s that might be used for out of state deliveries or shipments, to require a Ship To address, because the Ship To address is what Paradigm uses to know which taxes to apply to an order.

To set these Ship Via’s to require a Ship To address, go to Company Preferences and on General tab, click “Ship Via Setup.” Then click the check box under “Require Ship To address” to require a salesperson to enter a Ship To address.