Material Sets (Product Group Taxability)

You can group products in material sets so you can map lists of products to applicable tax rates without the need to configure individual mappings for each product in the list.

Typically, tax departments organize inventory items into groups of products that share taxable status such as reduced rated, increased rated, or standard rated. Grouping reduces the need for a one-to-one mapping of products to product taxability rules to only those specific products which cannot be easily grouped.

By default, ONESOURCE Indirect Tax Determination identifies each inventory item (product code) that does not result in a standard tax liability. Each of these product exceptions are then associated with a taxable authority through taxability rules that specify the applicable rate, date range, and invoice description.

Material Sets and Material Lists

A Material Set is a grouping that you define. It is made up of Material Lists, each of which contain multiple Material List Products.

Material Sets:

• Are configured on the Tax Data > Materials page.
• Belong to Material Set Groups.
• Consist of one or more Material Lists.
• Are owned by a Determination company, and can be shared with other Determination companies by a Custom Data Provider.
• Can be associated with an Authority on the Authorities > Extended Configuration > Material Sets page for the purpose of creating Authority Rate Sets.

Material Lists:

• Are configured on the Tax Data > Materials page.
• Must be uniquely named across all Material Sets.
• Belong to a single Material Set.
• Have a validity period (Start and End Dates).
• Consist of one or more Products from the Determination Product Tree from one or more Product Groups.

Products:

• Are added to a material list on the Tax Data > Materials > Products page. You can add custom products to a material list using the Ungrouped Material page, which lists all custom products that do no belong to a Material List.
• May belong to multiple Material Lists, as long as the Material Lists are owned by different Material Sets.

Mapping Materials to Rates

There are two primary ways to map a material to a rate for a selected authority:

• You can create a rule that specifies a Material List rather than an individual Product Name. If that rule is matched, the rate or fee indicated on the rule will be applied. This is the simplest way to quickly map all products in a Material List to a Rate.
• You can create an Authority Rate Sets. Each Authority Rate Set contains a number of rules that govern the application of rates to each material list in the specified Authority Material Sets. An Authority Rate Set may also include a fallback rule that specifies the taxability of any product not found in those material lists.

Example: Direct Mapping of Material List to Rule

• Sample Parent Co has a single Material Set: Office Products.
• Office Products contains 10 Material Lists including Paper, Furniture, and Food.
• Each Material List contains 100 products.
• The Paper Material List contains products such as RECYCLED500 and PHOTO1000.
• The TX - STATE SALES/USE TAX authority specifies a rule that includes a Material List of Paper and a Rate Code of CU (Consumer's Use).

Result

Whenever a product from the referenced Material List such as PHOTO1000 is encountered in a transaction and the rule is matched, Consumer's Use tax will apply to that product.

Example: Mapping Using a Rate Set

• Sample Parent Co has a single Material Set: Office Products.
• Office Products contains 10 Material Lists including Paper, Furniture, and Food.
• Each Material List contains 100 products.
• The TX - STATE SALES/USE TAX Authority Material Sets page lists Office Products (Sample Parent Co) as a Material Set active on the transaction date.
• The TX - STATE SALES/USE TAX authority maintains a Authority Rate Sets named Office associated with the Office Products material set.
• This rate set contains rates associated with each the various Material Lists found in the Material Set, such as Paper to CU (Consumer's Use) and Food to NL (Not Liable). In addition, it specifies a fallback rate for products that are not on any Material List.
• A rule is configured for this authority specifying a blank Product Name and Material List and a Rate Set of Office.

Result

The Rate Set will be evaluated for any transaction matching this rule. A Rate Code from the Rate Set will be applied based on which material list includes, if any, the transacted product.

Sharing Material Sets Among Transacting Companies

Follow these guidelines to effectively share Material Sets among companies:

• Configure your Material Sets, Material Lists, and Products on a single Custom Data Provider.
• If you use Custom Authorities, make sure that they are owned by the same Custom Data Provider.
• Product Mappings of ERP product codes to Determination Products can be owned by the Custom Data Provider or by the transacting company, but they must resolve correctly to the Determination Products found on the Custom Data Provider's Material Lists.
• The child companies (transacting companies) must specify the Custom Data Provider maintaining the custom Materials, Products, and Authorities on their Company Tax Preferences page. On the Tax Preferences page, you can also set the default Product Mapping Group; however, input XML can specify any Product Mapping Group that contains the correct mappings.

Managing Effective Dates

Date ranges are enforced for most of the data described in this topic. If you enter data that violates the effective date range guidelines shown here, an error message is displayed.

• Products have effective date ranges for their inclusion in Material Lists. A product will only be valid for a material list to the extent that their date ranges overlap. A product with the same name may be configured twice in a Material List, as long as the date ranges do not overlap. For example, Product date range = 1/1/2006-12/31/2006, Material List date range = 6/1/2005-5/31/2006; Product will be valid in Material List from 1/1-5/31/2006.
• Material Lists have effective date ranges for their inclusion in Material Sets. A material list will only be valid for the Material Set to the extent that their date ranges overlap. See the example above.
• Authority Material Sets have effective date ranges for their association to the Authority. Authority Material Set date ranges may not overlap.
• Authority Rate Sets have effective date ranges. This date range must fall within the date range of the associated Authority Material Set. Example: Rate Set date range = 1/1/2006-(no end date), Authority Material Set date range = 1/1/2006-(no end date); valid.
• Rules have effective date ranges. The Material List or Rate Set specified on the rule must overlap with the This date range must fall within the date range of the associated Authority Material Set. Example as above.