Configure Smart Tax Adjustments

Configure Smart Tax Adjustments by defining document eligibility, time limits, adjustment document settings, and reason codes before using the tool.

Important:

The configuration tasks require knowledge of SAP tax settings. The person configuring the tool should understand SAP tax codes and how they apply to your documents.

Define which documents are eligible for adjustment: Set specific filtering criteria to determine which documents are eligible for adjustment.
Set time limits for adjustment: Define how far back documents are eligible for adjustment by setting a lookback period.
Configure adjustment documents: Specify adjustment document details for Accounts Receivable and Accounts Payable.
Create reason codes: Create codes to explain why a document was adjusted.

Define which documents are eligible for adjustment

Documents can be filtered by country, company, and document type. You can set as many filters as needed.

When the system evaluates a document, it finds the most specific filter that matches and applies that filter exclusively. A filter that specifies country, company, and document type takes precedence over a filter that only specifies country and company. If the most specific match is inactive, the document is treated as ineligible and the system does not fall back to a more general active filter.


Scenario	Result
Document matches the most specific filter; filter is active	Eligible for adjustment
Document matches the most specific filter; filter is inactive	Not eligible for adjustment
Document matches only a more general filter; filter is active	Eligible for adjustment
Document matches no filters	Not eligible for adjustment

In the Cockpit, go to Sovos Smart Tax Adjustments > Configuration Settings, then execute Smart Tax Settings.
Click New Entries.
Fill in at least one of the following fields:

Country
Enter the country code.
Company
Enter the company code.
Type
Enter the document type.
Set the filter as active or inactive:
- Select Active to mark documents that match this filter as eligible for adjustment.
- Do not select Active to mark documents that match this filter as ineligible for adjustment.
Click Save.

Set time limits for adjustment

You can set different limits for specific countries and states or provinces. Documents older than the time limit can't be adjusted. For example, a 30-day time limit for US documents means that only US documents posted within the last 30 days are eligible for adjustment. A document posted two months ago would not be eligible.

When the system evaluates a document, it uses the most specific time limit that applies to that document. A time limit that specifies country and region takes precedence over a time limit that only specifies country. For example, if you set a 60-day time limit for New York documents and a 30-day time limit for US documents, a New York document posted within the last 60 days would be considered eligible for adjustment.

In the Cockpit, go to Sovos Smart Tax Adjustments > Configuration Settings, then execute Set Time Limit.
Click New Entries.
Fill in the following fields:

Country
Enter the country code.
Region (optional)
Enter the region code.
Limit Days
Enter the number of days after which the document can no longer be adjusted.
Click Save.

Configure adjustment documents

In the Cockpit, go to Sovos Smart Tax Adjustments > Configuration Settings, then execute Adjust Document Configuration.
Click New Entries.
Select the process:
- To configure Accounts Receivable adjustment documents, select A/R.
- To configure Accounts Payable adjustment documents, select A/P.
- To configure both Accounts Receivable and Accounts Payable documents, select All.
Select whether the adjustment document will be debit or credit from the D/C dropdown.
Enter the document type in the Type field.
Enter the tax code for the adjustment document in the Tax Code field.
Click Save.

Create reason codes

In the Cockpit, go to Sovos Smart Tax Adjustments > Configuration Settings, then execute Define Adjustment Reasons.
Click New Entries.
Enter a code in the Reason Code field.
The code can be one to four characters long and can use letters, numbers, or both.
Tip:
It may be helpful to use a code that connects to the adjustment reason, like CERT for a late exemption certificate submission.
Select Active.
In the Reason Description field, enter a description of the reason for adjustment.
Click Save.

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