This section includes a sample configuration for a US-based company. In this example, each line on the purchase order read from the ERP system is allotted a tax code. The I0 code indicates a tax-exempt item and the I4 code indicates that the item is taxable.

When the invoice arrives, it is for a single-line item. The line pairing routine successfully identifies that line item and Kofax AP Agility proceeds to acquire the tax code. In this example, the following are four basic scenarios for acquiring the tax code.

• If the purchase order line has a tax code of I0, and no tax is charged on the invoice, Kofax AP Agility uses tax code I0 for the invoice line.

• If the purchase order line has a tax code of I0, and the vendor is charging tax, then the tax code remains at I0 for the invoice line. The vendor is short-paid the tax they are billing, such as the total amount of the invoice is the total amount minus the total tax amount.

• If the purchase order line has a tax code of I4, and no tax is charged on the invoice when tax is expected, then Kofax AP Agility uses a tax code for the invoice line that self-assesses the use tax for payment to local tax authorities (code U1).

• If the purchase order line has a tax code of I4, and tax is charged on the invoice, the invoice line tax code remains at I4, and the tax is paid to the vendor as billed.

By default, the following three tax group entries are created in the Settings > Invoice Processing > Capture Profiles > Tax Settings > Tax Jurisdiction Codes tab.

The tax jurisdiction code passed to the invoice line item must always be set to the tax jurisdiction code set against the purchase order line item. If the invoice has multiple line items, the vendor is only short paid the tax, if tax is billed. All tax codes selected for the invoice lines carry a short-pay instruction.

If the invoice has multiple line items, the vendor is charging tax, and any single invoice line item tax code carries an instruction to pay the tax as billed, then Kofax AP Agility books the entire invoice tax amount to the ERP system using the tax code in question.

For implementations involving SAP ECC, the header level calculate tax flag is checked in all instances except when an instruction to pay tax as billed exists.