How is sales tax applied in PROD?

-I know that it is by item setup suns=(blank) optical=exempt

-by customer header ex: kaiser-LA = CA2

therefore if kaiser place an order for 1 sunglass = since it is blank in items tax
code it will take customer header which is CA2; for 1 order of optical frames =
EXEMPT this is true now however, CALIFORNIA State tax rule states that sunglasses
are exempted from sales tax (modo to kaiser) and optical frames are taxable (modo
to Kaiser) . REVERSE application to our current setup.

how do I create a rule for Kaiser (and other stores in the state of CA) so that
optical frames are taxed, and sunglasses are EXEMPT?

I think we need to do some setup changes in Account Receivables.

Navigation:-
Receivables manager-->Setup-->Tax-->Exceptions(Item Wise) ,This is to apply tax to
optical frames for CALIFORNIA.
Receivables manager-->Setup-->Tax-->Exemptions(Customer Wise),This is for sales tax
exemption for a Bill To customer for shipping anywhere in CALIFORNIA .

Correct me if i am worng and please guide me on the same.

Tax setup is driving me mad..:) Could you please have someone analyze how tax is
calculated for MODO in Oracle?

Correct me if I'm wrong...tax is calculated based on items.(item setup)

Frames= EXEMPT
Sunglasses=(blank so it picks up TAX CODE set in customer standard)

We charge Sales Tax to orders according to State Tax Sales Tax application rule for
the following States/Country:

Canada = taxed sunglasses only USES TAX CODE CN1

California= taxed sunglasses only USES TAX CODE CA2
OK= taxed frames and sunglasses (Customers in OK has LOCATION TAX CODE)
MO=frames and sunglasses TAX CODE MO
NV=frames and sunglasses TAX CODE LV

WHAT WORKS: (opposite of what is set in item setup)

CANADA=CN1 tax on sunglasses
CALIFORNIA= CA2 tax on sunglasses
- locate where rule was set...is it item exemption?

INCORRECT APPLICATION:
OK, MO and NV picks up TAX CODE FOR SUNGLASSES ONLY and EXEMPT for FRAMES (BOTH
SHOULD BE TAXED)

Please advice.

Reference : metalink note # 118229.1 (11i Tax Troubleshooting Guide)

1. Check the customer - what is the tax code?

Receivable Manager: Customer-> Standard
- Is there a tax code at the header level?
- Go down to the address level (tax is based on ship-to address) - what

is the tax code?

- Are there any customer exemptions (customer) or exceptions (item)?
 Receivable Manager: Setup-> Tax-> Exemptions or Exceptions
- Exemptions: query up the customer, check if they have any exemptions,
and verify effective dates.
- Check the ship-to address of the customer and make sure to get the
state, county, and city information.

2. If using location-based tax, is there a tax code for the address?

Receivable Manager: Setup-> Tax-> Location
- Get the ship-to address of the customer.
- Make sure the State has the following:
Location in State zone,
A tax account,
A tax rate,
Effective dates,
Postal code range.
- Make sure the county for the given state has the following:
County is part of the given state,
A tax rate,
Effective dates,
Postal code range.
- Make sure the city for the given county has the following:
City is part of the given county,
Tax rate,
Effective dates,
Postal code range.

3. Is this an international customer?

- Review the tax setup:

a. Make sure you defined a Tax Code that has a tax code of 'INTL' for
international tax codes, and that the type is set to VAT. This way
autoinvoice will not validate against the AR_LOCATION values table for
the tax rate.
b. Check the effective dates and make sure the transaction dates are
within the effective dates.
4. Make sure the tax profile options are set.
System Administrator: Profile-> System -> query at site level in
Profile:'Tax:%':
- Tax: Allow Ad Hoc Tax Changes - Required
- Tax: Allow Manual Tax Lines - Required
- Tax: Allow Override of Customer Exemptions - Required
- Tax: Allow Override of Tax Code - Required
- Tax: Calculate tax on credit memos - Optional
- Tax: Inventory Item for Freight - Optional
- Tax: Invoice Freight as Revenue - Optional
- Tax: Use Tax Vendor - Optional (but have it set anyhow.)