Advanced Tax Setup: Part 2

  • By heather-holder
  • November 6, 2017

Make sure to check out last week’s post – which was part one of our 4 part series on Advanced AR Tax Configuration.

Contact Tax Groups

Just like how we created a group to link similar account labels together we must also create a group to link together similar Customers together based on their taxability.  This is done in Company > Users & contacts > Contact Tax Group.  By clicking the add button here you will be prompted to give your Contact Tax Group a name, and then save it.


Customer Setup

In order to have the tax apply to a customer’s invoice you will need to define that customer as being taxable and link their customer account to the Contact tax group which represents the taxation rate in their state or province.  This configuration is done on the ‘Additional Information’ tab of the customer record.  You can locate the customer records at Accounts Receivable > Setup > Customers > Customers.

Once you find the customer record you wish to modify click edit then click on the ‘Additional Information’ link at the top.


Once you are on the Additional information tab you will need to scroll down to the Invoicing details section. At the bottom of that section is where you will see the checkbox for Taxable and a drop down for the Tax group. The Contact tax group can be created here or you can select the one that you created in the previous step.

Once the appropriate tax group is selected, save the record.  This process must be completed for every Customer who you wish to have tax charged for.

Tax Authorities

The tax authority is used to track how much tax is collected for various agencies.  For example the City, County, State, Province or Country that you are collecting tax on behalf of are all separate tax authorities.

Tax Authorities are created in Accounts Receivable > Setup > Tax > Authorities > Add.  There are two required fields on this form, Name and Vendor.  The name will be saved as the unique key for this record and you won’t be able to change it once you save it.  The Vendor field is a dropdown where you link this tax authority to the vendor whom you will pay the taxes to.  If you wish to create a hierarchy of tax authorities, this can be done using the Parent Authority dropdown box.


The tax authority is also used later in Reporting.

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