How to: Configure destination based taxes for online stores

Further reading Microsoft Dynamics AX 2012 for Developers [AX 2012] SDK Download RunOperation Method

TutorialDynamics Ax Retail 2012 is equipped with necessary functionalities to make the transition from retail stores to online commerce. One key tenet in this vision is collecting taxes, and destination based taxing is the scheme used for online commerce transactions in the industry. Unlike retail stores, online web stores must collect based on the destination of the shipment or delivery - the "destination" of the sale.

Destination based taxing, which will be shortened as DBT or dbt henceforth, is composed of three separate steps: Configuration, synchronization and runtime evaluation

ConfigurationThis is the stage where user maps geographical locations to sales tax groups registered in the system. Following the flow General Ledger > Setup> Sales Tax Groups, user needs to open configuration form shown below.

Figure 1 - Sales Tax Group Configuration Form

In dbt, there are six address components that can be used to associate a geo-location with a specific sales tax group. These are:

a. Countryb. Statec. Countyd. Citye. Districtf. Zip Code

Country is the only mandatory field user must supply, whereas all others are optional. This means, customer may designate different address component to be used in determining the ultimate sales tax group information.

For instance, in the given screenshot above (Figure 1 - Sales Tax Group Configuration Form), tax group WA5PCT was mapped to two locations. If a delivery address has the same set of component and value pairs, i.e. USA as the country, WA as the state and Redmond or Bellevue as the city, WA5Pct group will be used in actual tax computation.

User is expected to fill all the geographical locations in the configuration form and associated with one sales tax group in the system.

Synchronization

After providing the data in Ax, user needs to run necessary jobs (A-1080_OC or N-1080_OC) to synchronize the tax data to online store database. For further information, refer to Commerce Real Time Data Synchronization documentation.

Run time evaluation

Tax service is a component running as part Commerce runtime environment, to discover tax information for the shipment addresses and provide the tax computation services. In order to make this happen, tax service will consume the configuration set up in previous stage.

DBT runtime works on the basis of best –matching precedence. This means, the more complete and specific configuration will take the precedence over other more generic lines. To exemplify these, see the following case:

The first tax group shown in Figure 2 California State Sales Tax, is configured to apply for all the locations in state of California in USA. Whereas the second configuration, CALA, is applicable to all destination in Los Angeles city, California USA.

Figure 2 California State Sales Tax

Figure 3 California Los Angeles Sales Tax

Let’s assume we have the following shipment address:

1234 Microsoft St. LOS ANGELES CA 90015 USA

For this address, the best matching and the most complete configuration is the one shown in latter case, and CALA Sales tax group will be used in tax computation. However, if there was any other addressee in other parts of California but not in Los Angeles city, the former configuration Sales tax group named as “CA”, will be consumed since that is the one best fitting.