Sales transactions

Prerequisites for applying Entity/Use Codes to sales transactions:

1. Set an Entity/Use Code for the customer.

2. Include the customer in the transaction information.

3. Add the customer's certificate information.

Tax Determination will only apply the entity/use rule if all three conditions are met.

If you selected Require Entity/Use as Matching Criteria in the Tax Determination settings

Important:

This setting, managed by Sovos, also applies to the organization's customers and vendors. After configuration, this setting can't be changed.

Allowed actions

• You can select multiple Entity/Use Codes for various types of exemptions.

• You can map the Tax Determination Entity/Use Code to your company's product's exemption code. You can also pass the Tax Determination Entity/Use Code.

Requirements

• The customer must already exist in Tax Determination.

• You must select at least one Entity/Use Code in Step 3 of the Customer page in Tax Determination.

• You must add certificate information for the applicable entity or use and taxing jurisdiction.

• The ship-to location on the transaction must match the certificate's taxing jurisdiction.

• You must provide Entity/Use Codes in the JSON calculation requests.

• If you select different Entity/Use Codes for the organization and vendor, Tax Determination uses the vendor's Entity/Use Codes if the vendor is passed on the transaction. If the vendor has no codes, Tax Determination uses the organization's codes.

If you did not select Require Entity/Use as Matching Criteria in the Tax Determination settings

Important:

This setting, managed by Sovos, also applies to the organization's customers and vendors. After configuration, this setting can't be changed.

Allowed actions

• You can select only one Entity/Use Code. This code will be used on all transactions even if other Entity/Use Codes or no codes are passed on the transaction.

• Entity/Use mapping is not needed.

Requirements

• The customer must already exist in Tax Determination.

• You must add certificate information for the applicable entity or use and taxing jurisdiction.

• On the transaction, you must pass the customer and ship-to location. The ship-to location must match the certificate's taxing jurisdiction.

Purchase transactions

Purchase transactions do not use certificates. Instead, set Entity/Use Codes at the organization level or vendor level. Organization-level codes apply entity/use rules to all purchases, while vendor-level codes apply rules only to purchases from that specific vendor. When using vendor-level codes, include the vendor information in the transaction.

If you selected Require Entity/Use as Matching Criteria in the Tax Determination settings

Important:

This setting, managed by Sovos, also applies to the organization's customers and vendors. After configuration, this setting can't be changed.

Allowed actions

• You can select multiple Entity/Use Codes for various types of exemptions.

• You can map the Tax Determination Entity/Use Code to your company's product's exemption code. You can also pass the Tax Determination Entity/Use Code.

Requirements

• If you select the Entity/Use Codes on the Organization page in Tax Determination, creating vendors is not necessary. You only need to create vendors if you want to select a different set of Entity/Use Codes for each vendor.

• You must select at least one Entity/Use Code on either the Organization page or the Vendor page in Tax Determination.

• You must map the Entity/Use Code to your company's product's exemption code, unless you are passing the Tax Determination Entity/Use Code.

• On the transaction, you must pass your company's product's exemption code or the Tax Determination Entity/Use Code. If the Entity/Use Codes are selected on the Vendor page, the vendor must also be passed with the transaction. If the Entity/Use Codes are selected on the Organization page, the vendor does not need to be passed.

• If you select different Entity/Use Codes for the organization and vendor, Tax Determination uses the vendor's Entity/Use Codes if the vendor is passed on the transaction. If the vendor has no codes, Tax Determination uses the organization's codes.

If you did not select Require Entity/Use as Matching Criteria in the Tax Determination settings

Important:

This setting, managed by Sovos, also applies to the organization's customers and vendors. After configuration, this setting can't be changed.

Allowed actions

• You can select only one Entity/Use Code. This code will be used on all transactions even if other Entity/Use Codes or no codes are passed on the transaction.

• Entity/Use mapping is not needed.

Requirements

• If you select an Entity/Use Code on the Organization page, creating vendors is not necessary. If you want to select a different Entity/Use Code for each vendor, you must create the vendors.

• You must select one Entity/Use Code on the Organization or Vendor page.

• On the transaction, you must pass the customer and ship-to location. The ship-to location must match the certificate's taxing jurisdiction.

• You must pass the vendor in the transaction if the Entity/Use Code is selected on the Vendor page. You do not need to pass the vendor in the transaction if the Entity/Use Code is selected on the Organization page.

• If there are different Entity/Use Codes selected for the organization and the vendor, and the vendor is passed on the transaction, the code selected on the Vendor page will be used.

Example use case

Use the POST.../entityUse/mapping/create request to map an organization's Entity/Use Codes to Tax Determination Entity/Use Codes. Proper mapping ensures that Tax Determination references the correct entity/use rule during transactions to determine whether exemptions should apply. When a customer is identified by one of the Tax Determination Entity/Use Codes, Tax Determination will apply the appropriate exemption details in the transaction assuming there is an existing certificate for that customer and given location.

Use the POST…/entityUse/mapping/create request for initial setup: Map your company's "RESALE CERT" code to Tax Determination's "RESALE - Resale" code so Tax Determination can apply the correct exemptions.

Use the POST…/entityUse/mapping/update request to change the existing mapping when your company switches from the old code "RESALE CERT" to the new code "RSL EXEMPT". Use originalMappedEntityUseCode to find which mapping to replace.