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Sales Tax Example: Child Jurisdiction's Tax in Addition to Parent Jurisdiction Tax

In this example, Pennsylvania state charges a sales tax rate of 6% for taxable goods and services. Philadelphia county, which is located in Pennsylvania state, charges an additional 1% tax on the same set of goods and services.

However, the tax proceeds for Philadelphia county are paid directly to the county while the tax proceeds for Pennsylvania state are paid to the state. In this case, the organization would want to track the applicable taxes for the two jurisdictions separately.

Important Note

This topic uses sample Sales Tax Rate records for Pennsylvania state and Philadelphia county to illustrate the sales tax functionality provided by Aptify and to illustrate how changing one or more fields can modify the sales tax behavior. These examples are not intended to reflect the actual requirements for these tax jurisdictions. Refer to Pennsylvania state's Web site (http://www.state.pa.us/) for information on its sales tax policies.  


This example includes the following scenarios:

Tax Jurisdictions and Sales Tax Rate Records

In this scenario, Pennsylvania state has the same Tax Jurisdictions and Sales Tax Rate record as shown in Sales Tax Example: Child Jurisdiction Overrides Tax of Parent Jurisdiction.

Philadelphia county has the same Tax Jurisdictions record as shown in Sales Tax Example: Child Jurisdiction Overrides Tax of Parent Jurisdiction, but the Sales Tax Rate is different: the rate is 1% and the Override Parent Tax Rates option is not selected, as shown in the following figure.

Parent Tax Rate Applied in Addition to Child Rate
Typically in this type of scenario, the child sales tax rate would have a different set of GL accounts from the parent rate so that the system can track the separate tax amounts in different GL accounts.

Sample Order – Philadelphia Ship To

In this scenario, the Tax Details for an order with a Pennsylvania Ship To address remains the same as in Sales Tax Example: Child Jurisdiction Overrides Tax of Parent Jurisdiction. However, when a customer in Philadelphia places an order for a taxable product, Aptify automatically calculates a 7% sales tax for the order but breaks up the tax into its component parts: 6% for Pennsylvania state and 1% for Philadelphia county. The following figure illustrates the Tax Details for a $100 taxable order whose Ship To is in Philadelphia.

Parent and Child Taxes Applied

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