Changing Legacy Tax Percentages
This section explains how to change a tax rate or replace one legacy tax code with another. Provincial or local rate changes, combined taxes such as Canadian HST, and similar updates require more than editing the Tax % field on a single code. Tax codes are referenced throughout configuration, customer records, and open transactions.
Note: If your dealership uses AvaTax for tax calculation, rate and code maintenance is handled in Avalara and through AvaTax configuration. See the AvaTax: Introduction to Avalara's AvaTax. This topic applies to legacy (internal) tax only.
The topics in this section include:
Task Overview
Complete these tasks in order when you change a legacy tax rate or code:
| Number | Task | Link |
|---|---|---|
| 1 | Confirm the effective date and which locations are affected. | Before You Begin |
| 2 | Decide whether to create a new tax code or change Tax % on an existing code. | Choose an Approach |
| 3 | Determine whether the location uses Tax 1 and Tax 2 or Tax 3 and Tax 4. | Determine Whether You Use Tax 1 and 2 or Tax 3 and 4 |
| 4 | If you create a new code, add it. If you change Tax %, edit the existing code. Do not do both. | Configure the New or Updated Tax Code |
| 5 | If you created a new code, re-point defaults and reference data to the new code. If you changed Tax % on an existing code, skip this task. | Update Defaults and Reference Data |
| 6 | Review open documents. If you created a new code, change codes on documents that should use the new rate. If you changed Tax %, the code stays the same; confirm whether each open document should use the new percentage. | Review Open Transactions |
| 7 | After Accounts Receivable month end, review remaining open tickets. | After Month End |
If the change is a Canadian combined tax such as HST, also complete Canadian Combined Tax Example (HST). If the location uses Tax 3 and Tax 4 with rental contracts or tiered tax, also complete Rental and Tiered Tax.
Before You Begin
Confirm the effective date of the rate change with your tax advisor. Plan which tax codes apply before and after that date. Invoices already posted retain the tax that was calculated at billing; changing configuration does not re-calculate historical invoices.
Identify every location that must use the new rate. Tax 1, Tax 2, Tax 3, and Tax 4 codes are defined per location on the Tax 1, Tax 2, Tax 3, and Tax 4 screens.
Choose an Approach
You can change tax in one of these ways. After you choose, follow only the path that matches that choice. The remaining work is not the same for both approaches.
| Approach | When to Use It |
|---|---|
| Create a new tax code |
Use when a new rate takes effect on a specific date and you must show the old rate on some documents and the new rate on others during a transition. Note: For most statutory rate changes with an effective date, creating a new code and re-pointing defaults is safer than editing the percentage on a widely used code. |
| Change Tax % on an existing code |
Use when the same code should always represent one rate and you do not need the old rate and the new rate in the system at the same time. |
Determine Whether You Use Tax 1 and 2 or Tax 3 and 4
Legacy tax is grouped as Tax 1 and Tax 2 (single-character codes) or Tax 3 and Tax 4 (four-character codes). The steps you follow depend on which pair your dealership uses.
-
If Use Tax 3 and Tax 4 is selected on the System Settings - Location tab for a location, that location uses Tax 3 and Tax 4 for sales tax calculation. Configure codes on the Tax 3 and Tax 4 screens. See also Tiered Tax System.
-
If Tax 3 and Tax 4 are not activated for the location, configure Tax 1 and Tax 2 on the Tax 1 and Tax 2 screens.
How customer and part defaults combine is described in Tax and Discount Defaults.
Configure the New or Updated Tax Code
Work on the Tax 1, Tax 2, Tax 3, or Tax 4 configuration screen that matches the location. Set Tax %, G/L Account, and (for Canadian dealerships) Canadian Tax Type (GST, PST, HST, or QST).
-
If you are creating a new code, use the add procedure. Do not edit Tax % on the old code. See Adding a Tax 1 Code, Adding a Tax 2 Code, Adding a Tax 3 Code, and Adding a Tax 4 Code.
-
If you are changing Tax % on an existing code, open that code and save the new percentage. See Editing a Tax 1 Code and the corresponding Tax 2, 3, and 4 topics.
Verify that the general ledger account on the tax code matches your chart of accounts for the new rate.
Update Defaults and Reference Data
Complete this section only if you created a new tax code. If you changed Tax % on an existing code, skip this section unless a record uses a different code that you also need to change.
Once the new tax code exists, update every place that still points at the old code. The areas in the table are the most common; your dealership may not use all of them.
| Area | Action |
|---|---|
| Location tax (all customers) | On the Location Tax screen (Configuration > CRM > Taxes & Discounts > Location Tax), update Tax 1–4 (and labor tax) codes for each affected location. |
| Customer location tax |
On the Customer Profile: Location Tax tab, update per-customer location tax rows that used the old code. Note: There is no standard utility to bulk-update customer location tax codes. Contact your IntelliDealer support representative if you need assistance updating many customer records. |
| Customer profile defaults | On the Customer Profile tab, update default Tax 1–4 codes when customers are not on location tax. |
| Company defaults for new customers | On the Accounts Receivable Defaults screen, update default Tax 1–4 codes for new customers if applicable. |
| Ship-to addresses | On the Customer Profile: Ship To tab and the Edit Alternate Ship to screen, update Tax 1–4 codes (including labor tax codes) used for ship-to taxation and general ledger reporting. |
| Job sites | On Configuration: Job Site, update Tax 1–4 codes on job sites used for rental and service taxation. |
| Parts defaults and part master | On Part Adds, update Tax 1 Applies, Tax 2 Applies, Tax 3 Applies, and Tax 4 Applies defaults and related quick-add tax codes. Review tax codes on individual Parts Profile records where parts store default tax codes. |
| Parts sales tax update | On Sales Tax Update, configure vendor/class/location combinations that assign Tax 1–4 to parts master records when the update program runs. |
| Service miscellaneous charges | Update tax codes on Quick Add Defaults and on each charge on Service: Miscellaneous Charges (Miscellaneous Charges detail). |
| Rental category / class | On Category Class Subclass Setup, update Tax1, Tax2, and Tax 3/4 applicable settings on category class records used at the rental counter. |
Review Open Transactions
Changing configuration does not always change tax on documents that are already open. Review open work in each department.
-
If you created a new code, change the tax code on headers and lines that should use the new rate. Leave the old code on documents that must stay on the old rate. Use Modifying Taxes/Discounts at the Line Item Level when a parts invoice line still references the old code.
-
If you changed Tax % on an existing code, the code on the document does not change. Tax calculated after you save uses the new percentage. Complete billing before you change Tax % if a document must remain at the old rate.
Review these document types:
-
Parts invoices and quotes—confirm header and line tax codes.
-
Work orders and service quotes—confirm tax codes on the work order header and segments.
-
Equipment quotes and invoices—confirm tax codes on the header and lines, including trade-in and service lines where tax rules differ.
-
Rental contracts—open contracts may retain tax codes assigned when the contract was created. Refresh or re-open contracts when tiered tax or rate logic requires it (see below).
Note: Service transactions sometimes use labor tax defaults from the customer, ship-to, or location tax configuration. Verify service open tickets separately from parts-only defaults.
Canadian Combined Tax Example (HST)
When a province moves from separate GST/PST (or RST) to HST, dealers often add a new HST tax code rather than re-label an old PST code. Invoices must show clearly whether the customer pays under the old scheme or HST.
-
Create the new HST code with the correct Tax % and set Canadian Tax Type to HST.
-
On each invoice line that should use HST, assign the HST code and remove separate PST (or RST) where HST replaces it. Update tax codes line by line on open documents; header-only changes may not be enough.
-
Keep prior codes active during the transition so pre-effective-date documents and returns can still use the old codes where regulations require.
Rental and Tiered Tax
If the location uses Tax 3 and Tax 4 with tiered tax rules, rental contracts can store tax behavior for the life of the contract. When tiered tax is enabled or tax codes change after billing has already run on a contract, tax on printed totals may not match earlier invoices. Review open rental contracts after the change. If tiered tax was activated or changed mid-contract, closing the original contract and opening a new contract may be required so billing uses the correct tax configuration.
After Month End
After Accounts Receivable month end processing for the period that includes the rate change, have each department review remaining open tickets (parts, service, equipment, rental).
-
If you created a new code, confirm tax codes match the new rules, then deactivate the old code when no remaining tickets need it.
-
If you changed Tax % on an existing code, confirm remaining tickets calculate at the new percentage.
Security: 999 - Configuration
Revision: 2026.10