OM and AR Tax calculation for header level freight charges and, for the lines in case of a NULL Tax code and line level charges are yielding different results causing a discrepancy in the tax calculation between AR and OM. (Doc ID 2758749.1)

Last updated on NOVEMBER 18, 2024

Applies to:

Symptoms

On : 12.2.8 version, Transaction Entry

ACTUAL BEHAVIOR
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OM and AR Tax calculation for header level freight charges  and, for the lines in case of a NULL Tax code on the line and line level charges are yielding different results. This is causing a discrepancy in the tax calculation between AR and OM
Find that Tax is calculated even when the tax_classification_code on the freight Item 'FREIGHT CHARGE ' is Exempt.
System parameter : Inventory Item for Freight is setup : FREIGHT CHARGE
System parameter : Invoice Freight as Revenue :Yes
In Inventory we setup the Tax classification code for FREIGHT CHARGE as EXEPMT , This is setup at Master org as well at Organization level (Warehouse) that is used on the order.
When creating an order in the Sales order, the tax on following levels

1) Header level Freight charge
2) Line Level for the lines in case of a NULL Tax code.
3) Line Level Freight charge

 is showing as Calculated , when same order is interfaced to AR and Invoice is generated the tax on the invoice is zero as expected.

STEPS
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The issue can be reproduced at will with the following steps:

1. log into Order management Responsibility.

2. Setup System parameter : Inventory Item for Freight is setup : FREIGHT CHARGE and : Invoice Freight as Revenue :Yes

3. In Inventory setup the Tax classification code for FREIGHT CHARGE item as EXEPMT at Master org as well at Organization level (Warehouse) that is used on the order.

4. Create an order with one line with null tax code.

5. Apply freight charge on the order header and on order Line  via Action> Charges window.

6. Perform action > calculate tax on order header, note down the tax value on the order header for the freight charge , Tax on the Line and Tax value on Line Charges  via Action> view tax details window.

7. Book the order, Pick, Ship and close the Line. 

8. Generate Auto invoice and check tax value on the order line and  freight charges on the Invoice.

Cause

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