US Tax Rates
Overview
Efimis provides a default set of tax codes for all newly provisioned US tenants.
Efimis defaults US tenants to 0% tax codes because US firms often do not charge sales tax on legal fees. However, US sales tax treatment can vary by state and by transaction type, so firms should confirm their own tax requirements
To support this flexibility, US firms can create and maintain their own tax codes while preserving the integrity of existing accounting transactions.
The ability to create additional tax codes is available only for US tenants. Australian and UK/IE firms cannot create additional tax codes because of BAS and VAT reporting requirements.
Default US Tax Codes
When a new US tenant is created, Efimis automatically creates the following tax codes.
| Code | Rate | Applies To | Display Name | Role |
|---|---|---|---|---|
| Z-P | 0% | Purchases | Zero Rated Purchase | Default Tax Free Purchase |
| GST-P | 0% | Purchases | Standard Rate Purchase | Default Taxable Purchase |
| Z-S | 0% | Sales | Zero Rated Sale | Default Tax Free Sale |
| GST-S | 0% | Sales | Standard Rate Sale | Default Taxable Sale |
| N-T | 0% | None | Non-Taxable | Default Non-Taxable |
These tax codes provide the default tax behavior required for US firms and can be assigned throughout the system where appropriate.
Managing Default Tax Codes
Some elements of the default tax codes can be modified after the tenant has been provisioned.
Editable Fields
| Field | Can be Edited? | Notes |
|---|---|---|
| Code | No | Fixed for system tax codes |
| Rate | No | Fixed for system tax codes |
| Applies To | No | Fixed for system tax codes |
| Display Name | No | Fixed for system tax codes |
| Role | Yes, except N-T | Can be reassigned for the billing default roles |
Creating Additional Tax Codes
US firms can create additional tax codes where required to support state or firm-specific tax requirements.
Creating additional tax codes requires:
- US tenant
- Settings – Unrestricted permission
Additional US tax codes are user-created tax codes. Once created, their code is fixed, but the rate, applies-to-value, display name, role and active status can be maintained.
| Field | Can be Edited? | Notes |
|---|---|---|
| Code | No | Fixed once created |
| Rate | Yes | Can be amended after the tax code has been created |
| Display Name | Yes | Can be edited |
| Role | Yes | Can be reassigned |
Tax Code Permissions
Managing tax codes is restricted to authorized users.
| Task | Required Permission |
|---|---|
| View tax codes | Employee access |
| Create additional US tax codes | Settings - Unrestricted |
| Edit/publish tax code changes | Settings - Unrestricted |
Tax Code Rules
A default tax role can only be assigned to one active tax code at a time. When a user assigns a role to another tax code, Efimis removes that role from the previous holder before publishing. If duplicate default roles are submitted, the update is blocked.
Default tax-free roles must use a 0% tax rate.
Tax Analysis Reporting
US tenants use the standard tax analysis report format. BAS and VAT return sections are used for the relevant AU/UK reporting formats, not for US tax reporting.
| Section | Included |
|---|---|
| Standard Tax Analysis | Yes |
| Australian BAS section | No |
| UK VAT Calculations | No |
This provides a straightforward summary of tax transactions without country-specific statutory reporting sections.
Key Behavior
| Scenario | Behavior |
|---|---|
| New US tenant created | Five default tax codes are created |
| Default system tax code rate changed | Not allowed |
| Custom US tax code rate changed | Allowed by the tax-code maintenance screen |
| Rate changed after postings | No posting-history block found in the software path checked |
| Display name updated on system code | Not allowed |
| Display name updated on custom code | Allowed |
| Role updated | Allowed, subject to validation |
| New tax code created | US tenants only |
| AU/UK/IE/NZ/SCO tenants | Cannot create additional tax codes |
Best Practices
- Do not edit custom tax-code rates casually after live use. Even if the system allows the change, firms should consider reporting and audit impact before changing a tax code already used on transactions.
- Review the default tax codes before processing live transactions.
- Create additional tax codes only where required for state-specific tax rules.
- Use meaningful display names to help users identify the correct tax code.
- Regularly review the Tax Analysis Report to validate tax activity.