Admin Sales Tax Configuration Guide

Admin Sales Tax Configuration Guide

In order to support Sales Tax Configuration, there are a number of steps that must be followed by admins to build out revenue categories and corresponding taxes. This article provides detail on each item and an FAQ. In each section, you will find a link to a how-to article with more detailed steps and visuals. 


Revenue Categories 

A Revenue Category describes a source of an organization's revenue. Revenue Categories can be defined at the corporate level (org) and at the property level. The revenue management team defines these during onboarding with Thynk and ensures that every accounting category at the product level maps back to a corporate revenue category. 


Example: At the corporate level, the following revenue categories can be defined: 

  • Food

  • Beverage 

  • Liquor 

  • Equipment

  • Room Rentals 

  • Services 

  • Miscellaneous

  • Guest Rooms 


Revenue Categories are defined at the organization level, while Accounting Categories are defined at the property level. This allows you to support both property level and corporate level revenue reporting. 


Learn more about how to create revenue categories and assign them to accounting categories here.


Taxes 


A tax is a fee that the government collects on a product or service. It could be a sales tax, a resort tax, or other. Taxes can be set up in Thynk as a percentage or a flat amount. 

Always set up your taxes first, and THEN, tax groups, and THEN, tax rules.

Taxes -> Tax Groups -> Tax Rules

Across the tax jurisdictions for each property in an org, admins should gather a set of all applicable taxes. As an example, an org with two properties in NY State may have the following taxes:
  • NY State Sales Tax 

  • NYC Sales Tax

  • NYC Occupancy Tax 

  • NYC Convention Center Fee 

  • Westchester County Occupancy Tax

  • Westchester County Sales Tax


At the tax level, the admin is responsible for the collecting the following: 


Name 
  • If you wish to display details about the taxes on documents, this name will be shown. 


Type 
  • Standard: This is any traditional tax that is implemented by a government agency 

  • Service Fee: These are any resort fee/ service charges that are collected by the property as add on fees. Read more in the FAQ below 


Fee Type
  • Currency taxes are a fixed currency amount (ex. $1.50 per room per night). When a tax is a currency, the Currency amount is required. 

  • Percent taxes are a dynamic percentage amount (ex. 6.675%). When a tax is a percent, the percent amount is required.


Compounding 
  • A compounding tax is a special tax calculated after and on top of a primary tax. For example: you can have a compound tax of 7% to be charged on top of the selling price of a room of $200 + Sales Tax @ 5%.

  • If a tax is compounding, then the tax is applied to a product subtotal that includes the application of any previous taxes. The order of application is set at the tax rule.

  • This is only relevant on percentage taxes. This means, that the compound tax can only be checked if the fee type = percentage.


Service Fee Exclusive
  • A service fee or service charge is an additional fee hotels & resorts may charge in addition to the hotel room rate. Example are wifi, parking, resort facilities, gym access, etc.

  • If a tax should not be applied to any service fees (taxes of type = service fee), check this box. A good example is Occupancy Tax, which is typically only applied to the room rate and not service fees. Sales tax, meanwhile, may be applied to all service fees. 


Used 
  • This field is set manually once taxes have been applied to a booking to ensure that they are not changed while active.  If we didn’t have this rule, we would lose historical tax data and possibly recalculate amounts on bookings after customers had already paid.



Example: If you have a 10% service fee and then a sales tax which is 'compounding' and not 'service fee exclusive', that next tax gets applied to the base product amount + 10%.


Tax Groups 


A tax group is how you bundle taxes for a property. 


Once you’ve built your taxes, the next step is to build Tax Groups. If you operate multiple properties in the same tax jurisdiction, they can share a set of tax groups. 

By default, there will be two tax types that admins can create groups for: Default and Exempt. However, an org may have different types of exemptions (ex. Government vs. Nonprofit). During onboarding, you can create additional tax group types. 


At the tax group level, the admin defines: 


Name


Tax Group Type
  • Default options are Default/Exempt but any values added during configuration will show here 


Start Date/ End Date (optional) 
  • If you have a start date or end date on a tax group, then the tax group will never be applied to bookings outside of those dates 


Active
  • This will be checked by default, but if you prefer to manually activate a tax group vs. using start dates and end dates this is also possible 



Here is a simple example:
  1. You may have two sets of taxes (Default/ Exempt) for your 3 New York City properties and two sets for their Westchester county property (Default/Exempt).
  2. For your NYC Properties, you also know that starting Jan 1, 2024, occupancy taxes are set to change and so a different group will have to be created for the default taxes. 


The admin would create the following groups: 

NYC Default Taxes: Default, End Date 12/31/2023

  • After Jan 1, admin would deactivate the group


NYC Default Taxes - 2024: Default, start date 1/1/2024


NYC Exempt Taxes

Westchester Default Taxes


Westchester Exempt Taxes 

Learn more about how to manage tax groups and property tax groups here.


Property Tax Groups 

To connect these 5 tax groups above to properties, the admin would add a Property tax group record for each applicable property. Cloning any group would automatically clone the property connections for ease. If a new property is onboarded in an existing tax region, the admin can easily add the property to the group. 


Learn more about how to manage tax groups and property tax groups here.


Tax Rules


Tax Rule are the scenarios when a tax is applied to a specific product or service. 

Now the admin has created all the taxes that are relevant and the groups that will be assigned to bookings for each property. Next they must connect taxes to these groups. This is done by creating “Tax Rules.” 

To do this, the admin could go from the tax directly or from the tax group directly. They would create a tax rule with: 

  • A lookup to the tax group (autofilled if from group)

  • a lookup to the tax (autofilled if from tax)

  • A lookup to a revenue category - This says “Apply this tax to all products of this revenue category on any bookings that this group applies to” 

  • Room Tax Category - this is optional and allows admins to handle room type products where occupancy tax may depend on certain criteria (i.e. room size) 

  • Order - this determines the order in which taxes within a group are applied to the products based on the rule 


Learn more about how to create tax rules here.


FAQs

When should I set up my property’s resort fees and service fees as taxes vs. products? 

  • When you set up resort fees with the sales tax model, they can be added to Tax Groups that are assigned to a property. Based on the tax rules set, service fees will be automatically applied to all the products on a booking of the revenue categories assigned. 

  • If resort fees are mostly ad-hoc, and not uniformly applied to all products, they are better represented as a product add-on at the booking level. 


What happens if I mostly apply resort fees to all rooms, but want an entire booking to be exempt from the fees? 

  • In this case, you would create a Tax Group Type and Tax Group to represent a “service fee exempt” booking. Then, on booking creation, you can select the correct tax group type and the exempt group assigned to the property for that type will be applied. 


What happens if I want to waive service or resort fees for some, but not all products on the booking? 

  • In this case, the tax model does not support your need and you should instead add products directly to the booking to represent service fees. 


Are taxes applied to service fees?

  • If you are using sales tax, then you can also set up service fees as taxes. Often, these fees are exempt from occupancy taxes, but not from sales taxes. By marking your occupancy tax as service fee exclusive, you will ensure proper taxes are applied or excluded. 

  • If your service/resort fees are set up as products, then you will use tax rule assignment to ensure that the revenue category for the fees has the right tax assignment 


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