Tango Product Bulletin - Lease Tax Rate Effective Dating - Revised

Modified on Tue, 3 Mar at 1:03 AM

Overview

Tango would like to bring to your attention key details regarding the storage and usage of tax rate and how effective dating works in the system. This applies to all Tango Lease customers.

Tax Rates Setup and Storage

Tango currently uses a tax table to store tax rates. The maintenance of this information is performed by the Tango Support team. Each entry has an effective start and end date for each state/province, county, and country and a description that is visible on screen through the Tax Type drop-down field on Recurring Costs, Lease Payments, and Receivables. Some customers display the tax rate as part of the description, as depicted below. When a new tax rate is set up, the old rate entry is end-dated and a new entry is created in the table with the same code, the new tax rate, the new effective date (no end date provided), and an updated description with the new rate.

Application of Tax on System-Generated Payments

When rent or billings are generated (resulting in lease payments or receivables) the tax is calculated based on the effective date of the tax rate for the month being generated. However, the lookup description of the Tax Rate will not change to the current description until the effective date occurs.

Example: Florida sales tax rate decreased from 7% to 6% effective December 1, 2023

When generating rent for December, in November, the lease payments will correctly calculate the sales tax amount applying the new tax rate of 6%, however, if the rents are generated before December 1^st (the effective date of the new rate), the tax rate description will remain the old description which includes the old rate of 7%.

Potential Action: As referenced above, the new tax rate is set using the existing tax code (value of “103” in the above example from the tax rate screen). We re-use the tax code so existing recurring cost data does not need to be updated to automatically utilize the new rate moving forward. Tango’s recommended best practice is to not include the tax rate in the tax rate description. Should this discrepancy prove confusing, Tango can assist in removing the rate from the description (change US-FL-Baker County (7%) and US-FL-Baker County (6%) to simply US-FL-Baker County).

Application of Tax Rates on One-Time Payments/Billings

One-Time Payments/Billings use the creation date/system date of the OTP and apply the sales tax rate effective for that period. The lookup description of the Tax Rate will show based on the effective date of the sales tax rate.

Example: Florida sales tax rate decreased from 7% to 6% effective December 1, 2023

A lease payment (or receivable) created on 11/7/23 (or any date before 12/1/23) will calculate the tax amount based on the sales tax rate effective for that period (7%) (note the example directly below); the Tax Rate (description) is also based on the sales tax rate effective for that period (US-FL-Baker County 7.0%). When the effective date of the new rate occurs (visible to the user on or after 12/1/23), the tax rate description field will change to the new description showing the new tax rate of 6%. Please note, that tax amounts on historical payments and billings will never change.