Tax Management Overview

The IDI platform provides a comprehensive tax management solution that makes taxing seamless, saving you money and time. The integrated tax engine provides:

• Regular updates to all federal, local and state taxes.
• Flexibility to customize taxes as needed.

In addition, IDI’s internal department of tax experts are intimately familiar with telecom tax law and regulations and focused on compliance. They can advise and help you troubleshoot issues that may arise.

How to configure and use IDI’s tax management solution is covered in a series of articles crafted for different audiences:

• Overview (this article) provides a quick introduction for all IDI platform users that need to understand how taxing works and where to find the functionality related to their area of responsibility.
• Planning and Setup is intended for admin-level users responsible for configuring and managing the IDI tax solution to meet specific business requirements. It shows how to use the various IDI platform functional areas where tax rules are configured.
• Managing Taxes on Orders and Accounts is intended for sales associates that assemble and submit orders, and service associates that manage customer accounts.
• Core Reports for Auditing Taxes describes the wide array of core reports for taxes in IDI’s Report Explorer.

Links to related articles and other tax resources are provided at the end of this article.

How Taxing Works Quick Overview

Tax Class

IDI provides a standard set of tax classes that are assigned to chargeable items in the IDI platform: product catalog items, contract penalties, adjustment types, and usage types. Tax classes drive the specific taxes that get applied at the time of billing (or tendering for retail transactions).

Tax State

The Tax State is the foundation of the taxing function. Note: Tax State includes US federal taxes, District of Colombia, and foreign taxes (particularly Canadian provinces and Central American countries). Since each state is free to determine how taxes are levied to its residents, each state is represented by an individual tax state. Typically, states are further broken down into individual municipalities with different local tax laws. IDI uses the concept of Tax Jurisdictions to account for this.

Tax Jurisdiction

Tax jurisdiction represents an arbitrary geographic location as denoted by the state, county, city, and zip code information. Tax jurisdiction can be applied at the account or service level. Tax jurisdictions are assigned using the primary customer contact address, a service address linked to a service, or a service contact linked to a service.

Each tax state may have one or more tax jurisdictions. As new customers are added, each is assigned to a state tax and tax jurisdiction. These assignments determine the taxes levied against a customer’s charges during the billing operation (or at time-of-sale for retail transactions). With the tax state and tax jurisdictions set up, individual taxes are created and assigned to each entity as dictated by the applicable tax laws. Each individual tax comprises a percentage rate and other characteristics that control how the tax is levied.

There are five different tax types: federal, state, county, city, and regional. These types restrict your ability to assign a tax to a tax state and tax jurisdictions. For example, a federal tax can only be assigned to the federal tax state, whereas a state tax can only be assigned to a tax state. And as you would expect, the same restrictions apply to the county and city taxes. The federal, state, county, and city taxes can only be assigned to a single tax state. As a general rule, you need not be too concerned with these type designations or restrictions as the tax management solution maintains and controls these assignments.

Exemptions

Exemptions can be at the account, service, or catalog item level.

• Account-level exemptions trickle down to all services.
• Service-level exemptions are additive.
• Product-level exemptions are the lowest priority, and are additive but in situations where there are no account-level or service-level exemptions, they are the only exemptions considered.

Installment Plan Considerations

With billable products, taxes are charged on whatever is billed in that month, as opposed to the retail installment plans where taxes are charged up front. (With large-cost billable items, installment plans are just splitting up payments over successive bill periods).

Responsibilities Breakdown

Implementing an accurate taxing solution that meets your taxing obligations is a collaborative effort between you and IDI.

What IDI Does:

• Defines tax classes.
• Configures business rules and creates custom taxes to align with your business practices and requirements.
• Maintains and updates the tax database.
• Performs parallel billing to find where adjustments may be needed.

What you need to do:

• Setup
  • Work with your IDI implementation team to determine the proper settings to meet your business requirements.
  • Assign your staff tax-related permissions via Admin Console > Security.
  • Set tax-related parameters on account, adjustment, and usage types in Admin Console > Data Management. For account types, you specify whether to tax as residential or business. Adjustment and usage types must be assigned a tax class.
  • Configure tax-related parameters (tax class and exemptions) for catalog items in the Product Catalog with assistance from IDI as needed.
• Orders – View and manage tax-related information during order assembly as applicable. You can change or override the tax address (tax jurisdiction) on services, and change the tax address on retail products (on retail or direct invoicing transactions).
• Customer Management – View and manage tax related information on customer accounts, services, and products. This may involve:
  • Overriding the default tax jurisdiction on a customer account when you add/edit the account (tax jurisdiction defaults to primary customer contact address).
  • Managing the tax jurisdiction for services on the account.
  • Managing tax exemptions for the account and/or products and services.
  • Responding to customers’ questions and resolving issues as may arise.
• Audit – Review reports and tax configuration on a regular basis, and open cases regarding tax notices that impact your business, questions, issues, etc.

Knowledge Center and other Resources