Collecting scrap tax (for wholesale users)

Some states require wholesalers to collect scrap tax on behalf of the retailer they are selling to. See steps below for setting up scrap tax in your system.

1. Product code and package – A product code and package will need to be set up for the scrap tax. Work with HITS support to set up this product code and package. You will want to determine which department this scrap tax is assigned to for reporting and mapping to your accounting system.

2. Inventory assignment – The package containing the product code will need to be assigned to all inventory that is eligible for scrap tax. This is done in the inventory file. This can be set for all locations, or for a specific store (if needed).

3. Customer Settings – If the inventory is assigned a scrap tax, all customers by default will receive the scrap tax. To exempt customers from not being applied the scrap tax there are three options:
a) Block customer types from receiving scrap tax. This is done via System File 52 = RCWO (Retail, Wholesale, Commercial, or Other)
b) Block scrap tax in the customer file
c) Block scrap tax in the customer ship-To

Since scrap tax is handled via HITS “packages” the label for excluding scrap tax is labeled “Exclude Pkgs”.