Heavy Equipment Tax Setup

Overview

This is a recommended guide on how to set up the Heavy Equipment Tax, also known as Personal Property Tax, in your Point of Rental Software. 

Typically, a tax like this would be accomplished using the Item Percentage field in the item record. Due to the complexity of this tax and restrictions on the Item Percentage field you must use a Sales-Percent of Rental Item to accomplish this objective. This document will guide you through the process of setting up and charging this tax. If you have any questions or need advice regarding the tax itself, please contact your tax adviser or accountant, as Point of Rental cannot make recommendations or suggestions.

The reason for this tax is to pass the Personal Property Tax to your customers instead of paying for it out of pocket.


Topics in this article include:

• Setting Up the Heavy Equipment Tax Only
• Setting Up Heavy Equipment Tax with Diesel Engine Surcharge
• Applying the Applicable Tax Item to Equipment
• Marking All Items That are Considered Heavy Equipment
• Making a Percentage Rate Change on the Sales Percent of Rental Item

Setting up the Heavy Equipment Tax Only
 

To set up the Heavy Equipment Tax you will need to create an item as a Sales – Percent of Rental in your Point of Rental Software. We also recommend creating a category for this, such as Personal Property Tax or Heavy Equipment Tax. For information on how to create a category please see this article. These are the steps on how to set up the tax item. 

1. Go to your File Maintenance and click on Add Item.
 

Here's how to get there
Expert: Program Menu > File Maintenance > Item File > Add Item
Elite: Configuration Gear > File Maintenance > Item File > Add Item

Description
 

2. Set the KEY to your choosing (example ‘HEQTAX’).

Note: If you are a multi-store system and have different tax rates at each location create a record for each and include a -1, -2 on the end of the key. (i.e. HVEQTAX-1, HVEQTAX-2, etc...)
 

3. Set the NAME to your choosing (Example ‘_HEAVY EQUIP TAX CITY NAME).

4. Set the Quantity to 99999.

Classification
 

5. Set the Type to ‘Sales – Percent of Rental’.

6. Set the Category accordingly. If you want to post the income generated to a specific GL, you can use categories to accomplish this. See the article titled Item Category on how to set this up.

Rates
 

7. Set the percentage field to the tax percentage desired. In this example 0.1528 will equal 0.001528.

Options Tab
 

8. Go to the Options Tab and check the box for ‘Non-Taxable’, if you do not want to charge tax on top of this tax.

9. In the user-defined 2 field enter the following: The name may vary depending on your location.
Texas: HEAVYEQTAX
Oregon and Washington: HERT

Optional
 

10. You can enter a description in the Print Out tab, located in the Details tab if desired. This will print out on the contract below the percentage item.

11. When you are done click the ‘OK’ button.

Setting Up Heavy Equipment Tax with Diesel Engine Surcharge

Note: You will only need this item if you have inventory items that require a Diesel Engine Surcharge. If you do not have applicable inventory, you can skip this step.

To set up the Heavy Equipment Tax with Diesel Engine Surcharge you will need to create an item as a Sales – Percent of Rental in your Point of Rental Software. We also recommend creating a category for this. For information on how to create a category please see the Item Category article. These are the steps on how to do it:

1. Go to your File Maintenance and click on Add Item.

Here's how to get there
Expert: Program Menu > File Maintenance > Item File > Add Item
Elite: Configuration Gear > File Maintenance > Item File > Add Item

Description
 

2. Set the KEY to your choosing (example ‘HE50TAX’).
 

Note: If you are a multi-store system and have different tax rates at each location create a record for each and include a -1, -2 on the end of the key. (i.e. HVE50TAX-1, HVE50TAX-2, etc...)
 

3. Set the NAME to your choosing (Example ‘_HEAVY EQUIP TAX CITY NAME).

4. Set the Quantity to 99999.

Classification
 

5. Set the Type to ‘Sales – Percent of Rental’.
 

6. Set the Category accordingly. If you want to post the income generated to a specific GL, you can use categories to accomplish this.
 

Rates
 

7. Set the percentage field to the tax percentage desired. In this example 1.6528 will equal .015 (1.5%) for the Diesel Engine Surcharge and 0.001528 (.1528%) for the Heavy-Duty Equipment Tax.
 

Options Tab
 

8. Go to the Options Tab and check the box for ‘Non-Taxable', if you do not want to charge tax on top of this tax.
 

9. In the user-defined 2 fields enter the following. The name may vary depending on your location.
Texas: HEAVYEQTAX
Oregon and Washington: HERT

Optional
 

10. You can enter a description in the Print Out tab, located in the Details tab if desired.
 

Applying the Applicable Tax Item to Equipment

1. From your File Maintenance look for the item(s) that need the tax and modify the header record.
 

Note: To modify a record you can go to Functions > Modify or ctrl + M on your keyboard. 

2. Determine the appropriate Tax item for the piece of equipment. If the equipment is subject to only the Heavy Equipment Tax, use that specific Tax item. If it is subject to both the Diesel Engine Surcharge and the Heavy-Duty Equipment Tax, use the combined item. Not all equipment may require the same tax.

3. Go to the Options Tab, to the ‘Link Item’ Field. In the link item field, put the letter "o", then the key of your item, then #1. In this example, oHEQTAX#1.
 

Note: Do not include the -1, -2 if you are multi-store.

The result: Upon opening a contract with a qualifying item, it will put a quantity of 1 of the Tax item underneath the rental item. The Tax item will automatically charge the appropriate percentage of the rental amount of the item above it (1.6528% is just an example). The percentage charged will be based on the price of the rental item when it is added to a contract. If the rental rate changes, the percentage will not automatically update.
 

4. When done click ‘OK’ to complete.
 

5. Repeat these steps until all header records are marked.
 

Note: If you do not have header records, enter this in each serialized record. 

Marking All Items That are Considered Heavy Equipment

1. Modify all items that are considered Heavy Equipment, this may vary depending on your state's requirements.
 

2. In the Options Tab, in the userdefined2 field, type in the following information that is required for reporting.
Texas: HeavyEqTax
Oregon and Washington: HERT

Things you need to know:

• When a contract is written, the Tax item will display below the rental item, and calculate the percentage automatically. Do not move this item. 

• Multi-Store systems with varying tax rates will be prompted to select a Tax item.

• When renting or selling a Sales Item subject to the tax, the Tax item will automatically be added to the contract.

• When selling an asset, you will first add the asset then manually add the Tax item.

Making a Percentage Rate Change on the Sales Percent of Rental Item

Note: Do not modify the percentage on the original item.
 

1. Modify the original item by adding ‘.old’ to the end of the key and save. This will prevent the item from being used moving forward.
 

2. Make a copy of the old record: Remove ‘.oldcopy’ from the key.
 

3. Remove the header record from the old copy. This will prevent the item from being able to be rented.
 

4. Enter the new percentage in the percentage field.
 

5. Additional Action Required: Any reservations or quotes containing the old percentage item should be modified, the old percentage items removed, and then re-added with the new item.

Things you need to know:

• Writing a new contract will use the new item and charge the new rate automatically.

• Once the rental item and percentage item are added to the contract, their position on the contract cannot be changed. The rental item and percentage item cannot be separated on the contract. A sort on the rental item will sort both the rental item and the percentage item.

• When continuation billing a contract, the old item will be maintained until the item is returned and the contract is closed. This is in-line with the requirement noted in the link at the top of this document.

• Modifying rates on a previously closed contract will maintain the old percentage rate.

 

Related articles

Heavy Duty Equipment Tax and Diesel Engine Surcharge Reporting Instructions 
Item Category