Tax Groups

Tax groups categorize products and services for consistent tax treatment across transactions. This guide covers group configuration and product assignment.

Overview

Tax groups enable you to:

• Categorize products for tax
• Apply consistent treatment
• Handle special tax rules
• Manage exempt categories
• Support multiple jurisdictions
• Simplify tax setup

Accessing Tax Groups

Navigate to Tax Management → Tax Groups to manage groups.

Understanding Tax Groups

Group Types

Type	Description
Standard	Regular taxable items
Reduced	Lower rate items
Exempt	Non-taxable items
Zero-Rated	0% rate (VAT)
Special	Specific tax rules

Common Categories

Category	Tax Treatment
Physical Goods	Generally taxable
Digital Goods	Varies by state
Services	Often exempt
Food	Reduced or exempt
Clothing	Varies by state
Medical	Often exempt

Group Status

Status	Description
Active	Currently in use
Inactive	Not applied
Archived	Historical only

How-To Guides

How to Create Tax Groups

Adding Tax Group

1. Go to Tax Management → Tax Groups
2. Click New Group
3. Enter details:
   • Group name
   • Group code
   • Description
   • Default treatment
4. Configure by jurisdiction
5. Save group

Tax Group Configuration

Tax Group: Standard Physical Goods

Basic Information:
├─ Name: Standard Physical Goods
├─ Code: STD-PHYSICAL
├─ Description: Regular taxable merchandise
└─ Status: Active

Default Treatment:
├─ Taxable: Yes
├─ Default Rate: Standard rate
└─ Apply All Jurisdictions: Yes

Jurisdiction Rules:
├─ California: Taxable at standard rate
├─ Texas: Taxable at standard rate
├─ Oregon: No sales tax
├─ Montana: No sales tax
└─ [Other]: Per jurisdiction default

How to Configure Group Tax Rules

Rule Configuration

1. Open tax group
2. Go to Tax Rules tab
3. Add jurisdiction rules:
   • Select jurisdiction
   • Set tax treatment
   • Apply rate
4. Set effective dates
5. Save rules

Group Tax Rules

Tax Rules: Food and Grocery

Default: Exempt from sales tax

Jurisdiction Overrides:
┌────────────────────────────────────────────────────────────┐
│ Jurisdiction     | Treatment        | Rate    | Notes      │
├────────────────────────────────────────────────────────────┤
│ California       | Exempt           | 0%      | Unprepared │
│ Texas            | Exempt           | 0%      | Groceries  │
│ New York         | Exempt           | 0%      | Unprepared │
│ Illinois         | Reduced          | 1%      | Groceries  │
│ Virginia         | Reduced          | 2.5%    | Food       │
└────────────────────────────────────────────────────────────┘

Exceptions:
├─ Prepared food: Taxable at standard rate
├─ Candy: Taxable in some states
├─ Soft drinks: Taxable in some states
└─ Supplements: Varies by state

How to Assign Products to Groups

Product Assignment

1. Go to Products
2. Select product(s)
3. Assign tax group:
   • Single product: Edit → Tax Group
   • Bulk: Select → Bulk Update → Tax Group
4. Save changes

Product Tax Settings

Product: Organic Coffee Beans (SKU-COFFEE-001)

Tax Configuration:
├─ Tax Group: Food and Grocery
├─ Override: None
├─ Taxable: Per group rules
└─ Special Handling: None

Calculated Tax by Location:
├─ California: Exempt (food)
├─ Texas: Exempt (food)
├─ Illinois: 1% (reduced rate)
├─ New York: Exempt (food)
└─ Virginia: 2.5% (reduced rate)

How to Handle Special Tax Categories

Digital Goods

Tax Group: Digital Products

Description: Software, downloads, streaming

Treatment by Jurisdiction:
├─ California: Exempt (intangible)
├─ Texas: Taxable (digital goods)
├─ New York: Taxable (digital products)
├─ Washington: Taxable (digital goods)
└─ Florida: Exempt (intangible)

Sub-Categories:
├─ Software Downloads: Per state rules
├─ SaaS: Often service, varies
├─ Digital Music: Per state rules
├─ E-books: Often exempt (publications)
└─ Streaming: Per state rules

Services

Tax Group: Professional Services

Description: Consulting, legal, accounting

Treatment by Jurisdiction:
├─ Most States: Exempt
├─ Hawaii: Taxable (GET)
├─ New Mexico: Taxable (GRT)
├─ South Dakota: Taxable
├─ Washington: Taxable (B&O)
└─ West Virginia: Taxable

Note: Service taxation is jurisdiction-specific
and requires careful analysis

How to Set Up Product Categories

Category Mapping

Category to Tax Group Mapping

Product Category       | Tax Group              | Notes
────────────────────────────────────────────────────────────
Electronics           | Standard Physical      | Full tax
Office Supplies       | Standard Physical      | Full tax
Books                 | Publications           | Exempt in many
Software (Download)   | Digital Products       | Varies
Software (Boxed)      | Standard Physical      | Full tax
Food Items            | Food and Grocery       | Usually exempt
Clothing              | Apparel                | Varies
Medical Equipment     | Medical Supplies       | Often exempt

How to Manage Group Hierarchies

Group Hierarchy

Tax Group Hierarchy

Standard Goods
├─ General Merchandise
│  ├─ Electronics
│  ├─ Home Goods
│  └─ Office Supplies
├─ Specialty Items
│  ├─ Luxury Goods
│  └─ Collectibles
└─ Industrial

Reduced Rate Items
├─ Food and Grocery
├─ Clothing (where applicable)
└─ Medical Supplies

Exempt Items
├─ Prescription Medications
├─ Agricultural Supplies
└─ Manufacturing Equipment

Zero-Rated (VAT)
├─ Exports
└─ International Services

Advanced Features

Automatic Classification

AI-powered categorization:

• Product description analysis
• Suggested tax groups
• Bulk classification
• Accuracy tracking

Multi-Jurisdictional Rules

Complex scenarios:

• Origin vs destination
• Bundled products
• Mixed transactions
• Special rules

Tax Matrices

Comprehensive mapping:

• Product × Jurisdiction
• Visual rule management
• Bulk updates
• Export/import

Compliance Updates

Stay current:

• Rate change alerts
• Category rule changes
• New jurisdictions
• Regulatory updates

Best Practices

Organization

• Clear naming
• Logical structure
• Consistent codes
• Good documentation

Product Assignment

• Assign all products
• Regular audits
• Handle new products
• Review changes

Jurisdiction Rules

• Research thoroughly
• Document sources
• Update regularly
• Test calculations

Maintenance

• Periodic review
• Archive unused
• Update for changes
• Audit compliance

Configuration

Group Settings

Navigate to Settings → Tax → Groups:

• Default Group - New product default
• Auto-Assign - Automatic classification
• Hierarchy - Group structure
• Display - UI options

Rule Settings

• Effective Dates - Date handling
• Override Rules - Priority
• Inheritance - Parent rules
• Exceptions - Special handling

Troubleshooting

Common Issues

Wrong tax calculated

• Verify group assignment
• Check jurisdiction rules
• Review rate effective date
• Test with preview

Product not taxed

• Check group is taxable
• Verify jurisdiction
• Review exemptions
• Check effective dates

Group not appearing

• Check active status
• Verify permissions
• Review filters
• Clear cache

Bulk update failed

• Check selection
• Verify group exists
• Review permissions
• Check for locks

Related Documentation

Learn about Tax Rates to configure specific tax rates by jurisdiction.