Overview: Taxes

The information provided in this topic applies to the enhanced taxes feature available in R21 and higher. If you are not using enhanced taxes, please refer to Overview: Taxes and tax groups. You must be an administrator to create or edit a tax group.

Accurate taxing is a key component of the banquet check and booking check. As the administrator, it is your responsibility to ensure that a property's menus and items, function room rental, guestrooms, and other income are taxed correctly to comply with state and local laws.

A tax group is a collection of taxes that can be applied as a single set of rules, making it easy for you to modify and manage your property's taxes from one central location. Tax Collection Configuration section is where you can edit and update all the taxes that are applicable during the tax group’s date range.

For example, most of the events at your property are subject to a state sales tax of 4.0% and a local sales tax of 4.5%. Rather than manually applying those taxes to each menu and item at your property, you might create a Default Tax Group, add the taxes to it, and then assign that tax group as the default for your property. When a user creates a new event, the Default Tax Group will default on to the event and the appropriate taxes will be automatically calculated when the banquet or booking check is merged.

If the property's default tax group is not applicable to a particular event, the user can manually select a different tax group for this event only. For example, you might also have a Tax Exempt Group that is used for the occasional non-profit organization, where only one or no taxes are charged.

What are the advantages of Tax Groups?

• Updates can be made from one central location. All taxes are defined using the Tax Collection Configuration area of the Tax Group page. When your tax rates change, you simply need to clone the tax group and enter the new effective date range. All the taxes from the previous tax group will be copied to the new one, and you can update their rates accordingly. When you are ready to use the new tax group, you assign it to your property, and all new events, guestroom blocks, and other income that fall within the tax group's effective date range will be taxed accordingly. If a record falls outside the tax group's date range, the system notifies you with a message at the top of the Booking page and a warning icon next to the record. Simply select the correct tax group for the record and save again. Watch this video to learn All about taxes.
• Menus and items are taxed accurately. Some of the taxes in a tax group might only pertain to certain types of revenue (for example, an audio visual tax of 5.0%). How does the system know which ones to apply? When you add a tax to a tax group, you associate the tax with one or more revenue classifications. Since menus, items, function room rental, and other income items are also associated with revenue classifications, we can determine which tax should be applied based on matching revenue classifications. In the case of the audio visual tax, only items with a revenue classification of Audio Visual will be subject to that 5.0% tax.
• Guestroom taxes can be applied as a percentage and/or a flat rate. Your tax groups can include guestroom occupancy taxes that are a percentage and/or a flat rate (for example, 3.50 per person, per night). Those taxes will be automatically applied to all guestrooms blocks and will be displayed on the booking check.
• Gratuity and administrative charges are automatically taxed. The taxes in a tax group can be applied to the base price of a menu or item, its gratuity, and/or its administrative charge. When a tax group is applied to an event, you determine how to tax a menu or item by matching its revenue classification with a revenue classification in the tax group. For example, a Continental Breakfast is 12.95 per person and is subject to an 18% gratuity charge (based on its Food revenue classification). Your 4% local sales tax applies to the base price of a Food menu or item as well as its gratuity. When that menu is then added to an event, its base price (12.95) and gratuity (2.33) will be taxed automatically at the 4% rate.
  If a menu contains items from multiple revenue classifications, its revenue breakdown indicates which portion of the overall menu price should go to each revenue classification. For example, the Dream Wedding Package is 95.00 per person. The package includes all food, beverage, and audio visual and is allocated as follows:
  • 55.00 to Food
  • 30.00 to Resource
  • 10.00 to Audio Visual
  • As such, this menu is associated with three different revenue classifications, each of which might be taxed differently.

• Merge documents. No changes to merge document templates are required to implement enhanced tax groups. Only the name of the tax (for example, state sales tax) and the tax rate are displayed on the booking check and banquet check—the name of the tax group and tax collection are not shown. Each tax is shown as a separate line item unless you have multiple taxes of the same type (percent or amount) that also have the same name and rate. In that case, those taxes appear as a single line item, and their values are combined to display a total.

The Tax Group page is divided into the following areas:

Details
Property	The name of the property that this tax group is for.
Name	The name of the tax group. This does not display on the banquet check or booking check, this is for internal purposes only
Active	Leave this check box selected to ensure accurate taxing on the banquet check and/or booking check.
Description	A brief description of the tax group. This does not display on the banquet check or booking check, this is for internal purposes only
Start/End Date	The effective date range for the tax group and all the taxes it contains. If a new or modified record (such as an event) does not fall within the tax group's date range, a message will be displayed at the top of the Booking page. For events and guestrooms, a warning icon is also displayed next to the record in the Manage Events or Manage Guestrooms grid.
Tax Collection Configuration
Tax Collections	Displays the tax group's existing taxes.
Percent tab	Displays all the tax collections that have been defined for this tax group. A tax collection is a container that holds all the taxes that apply to the same revenue classifications. All properties will have at least one collection for their base taxes (state sales tax, city sales tax, etc.), but you might also have a few additional tax collections if you have a liquor tax, guestroom tax, and so on. Select a tax collection to see the individual taxes it contains. Tax collections only pertain to taxes with percentage rates.
Occupancy tab	Displays flat rate taxes for the guestroom revenue classification only (for example, a 3.50 per person, per roomnight occupancy tax).
Taxes tab	Displays individual taxes, along with their rates (percentage rate on Percent tab; flat rate on Occupancy tab), what they apply to (Base, Admin, and/or Gratuity), and whether they are compound and/or inclusive (if enabled for the property - available in R21 and above). Base – Tax only applies to the item but not to gratuity or the administrative charge. Admin - Tax applies to the item as well as the administrative charge. Gratuity - Tax applies to the item as well as the gratuity. Compound - Tax applies to a revenue value that includes previous taxes Taxes compound in the order they are displayed in the tax collection. If needed, you can reorder the taxes by clicking and dragging them into the correct position. Inclusive - Tax is included in the price of the menu or item. The exclusive price is then calculated accordingly by deducting the tax from the inclusive price and both prices are displayed to users in the application. In addition to menus and items, inclusive pricing can also be used for function room rental, guestrooms, packages, and other income.
Applies To	Displays all the revenue classifications (corporate and property) that are available at your property. You will need to associate the tax with all applicable revenue classifications by selecting the check box to ensure that menus and items, function room rental, guestrooms, and other income are taxed appropriately on the banquet check and booking check. Revenue Classification - Displays property and corporate revenue classifications available for property. Assigned Tax Collection - Displays current tax collection assigned to corresponding revenue classification.

To take advantage of the enhanced taxes functionality, you need to do the following:

1. (Optional) Add additional revenue classifications to meet your reporting and taxing needs.
2. Enter the default gratuity and administrative charge for every revenue classification.
3. Setup your tax groups.
4. Assign a default tax group to the property.