Order Tax Settings for NetSuite

Three Approaches to Taxes

There are three approaches for importing taxes on orders into NetSuite. This article will explain each approach below, FarApp's recommendations on which approaches work best, VAT, how to handle discounts and taxes together and how to troubleshoot common tax issues that may arise. Your FarApp tax settings can be configured here: https://app.farapp.com/settings#/marketplace_cart_settings/order_sync/tax_settings

 

1. NetSuite Computes Tax Rate and Tax Code, FarApp Overwrites Tax Rate with Storefront's Value

This is best practice approach that we recommend for all customers. NetSuite is able to calculate the correct tax code and rate for an order based on that order’s shipping address. While NetSuite's tax code calculations will often match the code used by your storefront, there can be situations where your storefront charges a slightly different rate than NetSuite does. This approach has FarApp allow NetSuite to calculate the tax code, but overwrites the tax rate with the value your storefront actually charged. This way, there will never be a discrepancy between your storefront and NetSuite on taxes. Even if your storefront's calculation was incorrect, you charged and collected incorrect tax, so it is best that NetSuite reflect this.

NetSuite Configuration:

NetSuite may already be configured to automatically look up the tax code for you, but if not, you should ensure that:

  1. Under Setup > Accounting > Set Up Taxes, "Enable Tax Lookup on Sales Transactions" is Enabled.
  2. On the same page, "Customers Default to Taxable" should also be Enabled (you may want to set existing customers to "Taxable" as well).
  3. On the same page, "Items Default to Taxable" should also be Enabled.

Additional configuration may be necessary, such as configuring your tax nexuses, but these three settings are often all that is needed.

Please note that our information regarding NetSuite tax configuration issues is quite limited compared to the resources NetSuite itself provides. We recommend consulting SuiteAnswers for additional support.

FarApp Configuration:

Your FarApp tax settings can be configured here: https://app.farapp.com/settings#/marketplace_cart_settings/order_sync/tax_settings

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Flagging "NetSuite line item taxes enabled. Applies to all channels/accounts." will cause FarApp to post tax rates at the line-item level on your Sales Orders/Cash Sales. Whether or not you check this box is entirely up to you and the needs of your organization. However, if you do so your NetSuite must have line-item level taxes enabled.

Occasionally, NetSuite may be unable to compute the tax code from an address. If this situation arises often for you, one option to resolve the issue is to configure a default tax code in NetSuite and enter the internal ID for that code into the field labelled: "Default tax code to set when no mapping found (internal ID)" This will cause FarApp to always post a tax code to your orders.

You can also do something similar with the field labelled "Tax code to set when tax on order is $0.00 (internal ID)" but it will only apply to orders with $0.00 tax.

 

2. NetSuite Computes Tax Rate and Tax Code, FarApp Posts Nothing

This approach is similar to the one above, but we do not recommend it for one reason. NetSuite is able to calculate the correct tax code and rate for an order based on that order’s shipping address. While NetSuite's tax code calculations will often match the code used by your storefront, there can be situations where your storefront charges a slightly different rate than NetSuite does. Using this approach leaves you vulnerable to situations where NetSuite calculates a different rate then your storefront. If there are any instances where NetSuite calculates a different tax, you may eventually notice that you charged a customer a different amount for tax than your NetSuite believes you did.

If you are using Avalara Tax in NetSuite or have any scripts in NetSuite that would overwrite whatever tax rates or tax codes we might post, this may be the approach you need to use.

NetSuite Configuration:

NetSuite may already be configured to automatically lookup the tax code for you, but if not, you should ensure that:

  1. Under Setup > Accounting > Set Up Taxes, "Enable Tax Lookup on Sales Transactions" is Enabled.
  2. On the same page, "Customers Default to Taxable" should also be Enabled (you may want to set existing customers to "Taxable" as well).
  3. On the same page, "Items Default to Taxable" should also be Enabled.

Additional configuration may be necessary, such as configuring your tax nexuses, but these three settings are often all that is needed.

Please note that our information regarding NetSuite tax configuration issues is quite limited compared to the resources NetSuite itself provides. We recommend consulting SuiteAnswers for additional support.

FarApp Configuration:

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3. NetSuite Computes Nothing, FarApp Posts Tax Code and Tax Rate

This approach is not recommended.

 

VAT

Most storefronts (such as Amazon) already include VAT in the prices on items. NetSuite's default behavior is to add the VAT to the item again. This will cause you to have twice the real VAT amount in NetSuite. At the bottom of your tax settings page in FarApp you can find fields for allowing you to subtract a VAT rate from your orders. With this configured, FarApp will subtract the VAT before NetSuite re-adds it. This will cause the VAT amounts to match between your storefront and NetSuite.

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Discounts and Taxes

There are two options for configuring your discounts and taxes to work with each other:

Option 1: If you want taxes to be applied to the discount amount on an order, you need to edit the discount item in NetSuite and under the "Accounting" tab, make sure the box "Apply Before Sales Tax" is not checked.

Option 2: If you do not want taxes to be applied to the discount amount on the order, make sure the "Apply Before Sales Tax" box is checked.

 

Troubleshooting Tax Errors

The first step to diagnosing any tax error is to manually enter the order into NetSuite exactly as FarApp would be (e.g. use the same items, customer, addresses, etc). If the taxes on this order are incorrect, or NetSuite does not let you save the order, then the issue does not lie with FarApp. The issue is most likely that your NetSuite has been improperly configured to handle taxes.

 

  • Error: An order has posted from FarApp to NetSuite successfully but the tax in NetSuite does not match the tax in the storefront.
  • Solution: Check whether your NetSuite has been configured to expect line-item level taxes. It most likely has been. Then check whether FarApp has been configured to post line-item level taxes as explained in approach 1 above (e.g. is "NetSuite line item taxes enabled. Applies to all channels/accounts." flagged?).

 

  • Error: An order has posted from FarApp to NetSuite successfully but the tax amount in NetSuite is $0.00
  • Solution: Your NetSuite has not been configured for taxes. See the NetSuite configuration steps above.

 

  • Error: An order will not post to NetSuite and displays an error on the FarApp orders screen. The error says that you cannot write to taxRate1, or that you are either 1) not configured for line-item taxes in NetSuite or 2) not configured at all for taxes in NetSuite.
  • Solution: Check both options 1 and 2: have you configured FarApp to post line-item level taxes but do not have line-item level taxes in NetSuite, or have you not configured your NetSuite for taxes at all?

 

  • Error: An error not addressed above.
  • Solution: Confirm that the items, customer and any other tax settings on the order are in agreement. Are you expecting the order to be taxable and have a tax code and tax rate but your customer is configured to not be taxable? This is an example of NetSuite settings you might not think of that can still effect taxes on your orders. 

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