Post Taxes: Calculate Tax on Retainage

This field is enabled only if you selected to post taxes on invoices (On Invoices box checked).

Check this box to include retainage in tax calculations on invoices (in AR) and progress billings (in JB). Retainage will be included in the tax basis and the full tax amount updated to the tax payables account (the Credit GL Account specified in HQ Tax Codes, Info tab) when the invoice is posted.

Note: If you do not allow posting taxes on AR invoices, but do allow posting taxes on progress billings in JB and want retainage included in tax calculations, you will need to check this box. However, you can use the F3 function to hide the tax-related fields on the AR Invoice Entry form and then either set the Tax Code field to a Default Type of 2-Fixed Value with a Value of ‘blank’ or remove any tax code designations for customers in AR Customers or contracts (those not used in JB).

Leave this box unchecked to exclude retainage from tax calculations on invoices and progress billings.

Note: Excluding retainage from tax calculations on invoices does not prevent taxes from being calculated on retainage when it is released (in AR Release Retainage). When retainage is released, a new invoice is created and the amount taxed as applicable. Although allowed, it is recommended that you do not change this flag once you begin processing invoices and billings, as it can have a serious impact on this and other modules relative to input defaults and release retainage processing. If changed, a warning displays, but gives you the option to continue. Make sure you only continue with the change if you are sure it is the correct action to take.