Configuring Tax Settings

This article explains how to set up tax methods, rates, and exemptions in RFMS. It covers where tax settings are managed, how to configure city and store tax rules, how to manage exempt customers and tax certificates, and how to handle special tax setups such as Use Tax and Canadian GST, PST, and HST. For details on how these settings affect quotes, orders, and invoices, see Tax Reference for Order Entry.

Where Tax Settings are Managed

Tax settings in RFMS are managed in three main places:

• City List: Defines tax rates and methods by jurisdiction.
• Store Codes: Define tax methods, rates, and Canadian tax settings for each selling location.
• Customer Records: Define whether a customer is taxable, exempt, or resale, and store related tax certificate information.

RFMS decides which settings apply based on those records and the customer’s tax status.

Keep city and store tax methods consistent

Try to keep the tax method the same in both the store and its city record. For example, do not set the store to Use Tax and the city to Sales Tax. That mismatch can force the order into Line Tax mode, which means users must choose the tax method on each line.

Set Up Tax Methods, Bases, and Rates

In both the City List and Store File, tax settings are entered in one section of the screen. You choose the tax method, tax bases, percentages, and pay-tax-timing before saving the record.

To configure tax settings for a City or Store:

Go to Order Entry > Utilities > Setup > Cities or Stores.

Open an existing record or create a new one.

In the Tax Settings section, complete these fields:

1. Tax Method: Choose Sales Tax, Use Tax, or Line Tax.
2. Sales Tax Base: Choose which part of the order is taxable, such as Material or Material + Labor.
3. Sales Tax Percent: Enter the sales tax rate.
4. Use Tax Percent: Enter a use tax rate if needed. This field is available only when the tax method is Use Tax or Line Tax.
5. Misc Tax Base: Enter a use tax rate if needed. This field is available only when the tax method is Use Tax or Line Tax.
6. Misc Tax Percent: Enter the miscellaneous tax rate.
7. Pay Tax When: Choose when tax is recognized, such as Delivered or Delivered & Paid.

Review any other store-level options, then click Save.

How These Settings Work

The Tax Method controls which tax percentage fields are active. For example, Sales Tax activates the sales tax fields, while Use Tax activates the use tax field.

If both a city and a store have tax settings, RFMS uses the City record when the Ship-To address matches that city. If there is no city match, RFMS uses the Store Code settings.

Advanced Misc Tax Base Options

Some Misc Tax Base options include Sales Tax in the calculation. These are rarely used. In most cases, they are needed only when local tax rules require a tax-on-tax calculation. Avoid these options unless your tax authority or accountant tells you to use them.

Update Tax Rates When Rates Change

When a tax authority changes its rate, you can update those values in RFMS.

To update multiple cities, go to Order Entry > Utilities > Setup > Cities, highlight the states or cities you want to change, then click the percent (%) icon to open Adjust Rates for Selected States. Enter the amount of the rate change, not the full new rate, then apply the change.

To update a store-level rate, go to Order Entry > Utilities > Setup > Stores, change the Sales Tax Percent, and save the record.

If you need existing orders to use the new rate, open each order, add or edit a line, and re-import the Ship-To address so RFMS recalculates the tax.

Set Up Customer Tax Status and Tax Certificates

Customer tax settings control whether tax is charged on an order. Each customer record includes a Tax Type.

Customer Tax Types

Taxable means tax is calculated based on the city or store setup.

Exempt means tax is not charged. This usually requires an exemption ID or certificate.

Resale means tax is not charged because the customer is buying for resale. This usually requires a resale number.

To set a customer's tax type:

1. Go to Customer > File > Edit Customer.
2. Choose Taxable, Exempt, or Resale.
3. Enter a Tax ID if required.
4. Save your changes.

Require a Tax ID for Exempt or Resale Customers

RFMS includes a system option that can require a Tax ID when a customer is marked Exempt or Resale.

Go to Utilities > System Options > Customers, then enable Require Tax ID for Exempt/Resale. This helps prevent users from skipping information needed for exemption reporting.

Manage Tax Certificates

Tax certificates store exemption documents for customers or ship-to locations.

1. Open the Customer Record > Tax Certificate tab.
2. Click Add to enter certificate details.
3. Press F8 to open and manage Certificate Type (Insert, Edit, Delete).
4. If multiple certificates exist, RFMS prompts you to select one during order creation.
5. Attach scanned certificates using the paperclip icon, .
6. Certificates can also be added to Additional Shipping Addresses, which override Sold-To certificates when used.

Important Rule for Exemptions

RFMS supports two exemption methods: Customer Tax Type and Tax Certificates. Use one method or the other. Do not use both for the same customer, because that can create inconsistent reporting and system behavior

Configuring GST, PST, and HST Base (Canadian Taxes)

For Canadian installations, you can configure GST, PST, or HST at the Store level. To configure tax in provinces with separate GST and PST(non-HST provinces):

• Use Sales Tax fields for GST
• Use Miscellaneous Tax fields for PST

Select the appropriate base for each (e.g., Material, Material + Labor). Avoid using Misc. bases that include Sales Tax unless required by a province (rare).

To configure GST/PST/HST bases:

1. Go to Order Entry > File > Stores > Edit.
2. Use the GST/HST Base drop-downs to select what the rate applies to (Material, Labor, or Miscellaneous).
3. Verify that Product Code Ranges match your definitions of Material (01-79) an Labor (80-98).
4. Miscellaneous charges are not linked to product codes and must be handled separately.
5. If the Sold-To city is not in the City List, RFMS uses the tax setup from the Store record.
6. The GST rate is pulled from the first Store record that has a non-zero rate.

  Tip: HST provinces should select Harmonized Sales Tax as the Tax Method. RFMS pulls the GST rate from the first Store record with a non-zero value.

Configure Use Tax

Use Tax is used when tax is based on cost instead of selling price, such as for installed jobs or goods the business uses internally. The Use Tax Percent field is available only when the tax method is Use Tax or Line Tax.

To Set Up Use Tax

1. Open the City or Store record and choose Use Tax as the Tax Method.
2. Enter the Use Tax Percent if needed, then save the record.

How Use Tax Behaves

RFMS may still calculate Sales Tax at first on a material-only order. When a service line or labor is added, RFMS removes the sales tax from the header and applies use tax automatically. This helps RFMS treat installed jobs as use-taxable while still treating material-only jobs as retail sales when needed.

RFMS applies Use Tax automatically when:

• the city or store is set to Use Tax, and
• the order includes service lines or zero-price material lines.

Use tax is posted during order export or at month-end processing.

Gross Cost vs Net Cost

Use Tax reporting can be based on either gross cost or net cost.

Gross cost includes all materials.

Net cost excludes materials that already had sales tax paid.

This choice is made when running the Month-End Tax Report. It is not set in the city or store record.

Special Tax Setups and System Options

This system options is located under Utilities > System Options > Order Entry > Order Entry

The current label is Compute Sales Tax by Selling Store’s Location. The older label is Sales Tax from Store Location. These are the same option

When this option is set to Yes, RFMS uses the store’s tax setup for Sales Tax, even if the Ship-To city matches a city record. Use Tax and Line Tax still check the city file first, then fall back to the store if there is no city match. This is a global setting.

Be careful when the city and store use different tax methods. A mismatch can force the order into Line Tax mode and make users choose the tax method line by line