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  • Phone+1 678.359.4184
  • Address126 A Singley Rd. Jackson GA 30233
  • Open HoursSupport : Mon – Fri: 9 AM – 6 PM EST / Sat: 9 AM – 1 PM EST

How Lizzy Understands Item/Unit Excise Taxes

If your dealership is in one of the simple tax rate states, count yourself lucky, and you don’t need to worry about this.  However, if your dealership is in a state where the unit is taxed at a different rate ( or even an exempt (0%) for a various reason ) than the other items on the invoice, then this article will help you understand better how Lizzy looks at those settings, and will hopefully help you understand how to configure them.

But first – lets discuss what is taxable!

Taxable vs Non-Taxable vs Exempt

Now most people think that non-taxable and exempt are the same thing, and refer to them incorrectly.  So let me explain how Lizzy interprets them.

Taxable : Most items and units are taxable.  Period.  This means that for any John/Jane Doe customer that walks in to your dealership to buy a given item – that item is taxable.  That means if anyone comes in to buy a spark plug, they pay sales tax on that spark plug.

Non-Taxable : In some states, certain items/units are non-taxable.  Period.  This means that for any John/Jane Doe customer that walks in to your dealership to buy this given item, that item is non-taxable.  As an example, in Pennsylvania, clothing is currently Non-Taxable.  That means, if you are a Pennsylvanian dealership, ANY customer that comes to your dealership to by a Leather Jacket doesn’t pay sales tax on that Jacket.  Period.

Exempt : This is where people get confused.  Exempt means that for a given reason, your taxing authority has said that a PARTICULAR CUSTOMER doesn’t not have to pay sales tax on some or all items.  Notice it doesn’t say that an item becomes non-taxable… it says that a given customer does NOT have to pay sales tax.  In Lizzy’s point of view – this means that the item is just as taxable as it’s always been – but the tax rate is 0%.  I emphasize that because it is much simpler to understand later on – and less confusing – when you think of exempt as taxable @ 0% vs not taxable.

Excise vs Invoice Taxes

An excise tax is any given tax that is attached to a specific item/unit that is in addition to OR instead of any other invoice tax.  Please note that in instances of instead of, that does NOT include OTHER excise taxes.  Meaning excise taxes that are told to ignore other invoice taxes will not ignore other excise taxes.  Also, from this point we are going to focus on Unit Excise taxes, because Item Excise taxes are straight forward – either the given item is charged in addtion to the invoice taxes or instead of – but there are no other factors, whereas units have lots of other things attached to them that can factor in.

Configuring Your Taxes

Now – lets talk about the 3 sections of check boxes in the tax settings.

The top section deals with the tax’s behavior and/or how different modules reference the tax.

The middle section deals with how various invoice items are taxed – most of these have to do with extra items on repair orders, such as Labor, Shop Materials, etc.

The third section deals with the various extras on units, such as Freight, Setup, Installation, Doc Fees, etc.

The other concern is tax tiers or thresholds.  This is simply when your state charges different rates for different dollar amounts.  For example, in Florida, each county has its own tax ( separate from state ) that only charges for the first $5000 sold.  So in that instance, you would have 2 tiers, the first one being the percentage charged on the first $5K, and the 2nd tier being what is charged on anything over that rate ( or instead of that rate – depending… but that is another topic ).  I mention this because we’ll talk about something later that refers to tiers.

How it all comes together

I’m going to give some examples to explain how to set up your various taxes – and they will be the more complicated ones, as the simple ones should be easy to figure out once you understand the complicated ones.

So lets set up an exempt unit tax.  There can be various reasons why you would want to set up an exempt unit tax ( such as Out of State sales, Indian sales, Farm Sales, etc ).  Now again – keep in mind that none of those predicate that the unit become non-taxable – it simply states that for a particular reason – this customer pays 0% on his unit tax.

So we go in and create the tax.  Then it comes down to what gets checked.  You would check This is an Exempt Tax in the top section, as well as Ignore Invoice Taxes ( since it makes no sense to create a tax to charge 0% on the unit, but then charge it whatever else is on the invoice) .

Now, because this is a unit excise tax – we don’t care about the 2nd section – since that all has to do with invoice behavior.

But the third section – that is critical.  At first glance, most people look at it and think “I’m not charging any tax on this, so nothing needs to be checked”.  And that is where most people are wrong.  Again, this is why I emphasize thinking of 0% instead of not taxable.  You actually want to check EVERYTHING that behaves the same was as the unit.  Any item that gets charged the same tax rate as the unit ( in this case – 0% ) needs to be checked. WHY?  Because everything in this section that remains unchecked becomes the purveyance of the invoice taxes.  Remember – we marked this tax to ignore invoice taxes… so when the invoice taxes are going through their own calculations, they know to ignore everything that is taxable about that unit.  So, for example, if you check Tax Freight, then that means that Freight would get charge the same rate as the unit for this excise tax ( in this case, 0% ), and then be ignored by any invoice taxes.  However, if you do not check Tax Freight, then Freight loses it’s ‘to be ignored’ status, and then the invoice taxes determine what tax rate freight goes at, or if its non-taxable.

So when setting up any unit excise tax, you need to check any tax items that would normally be taxed at the unit rate as well.  The same goes for normal invoice taxes.  In a standard John Doe walks in – what should be taxed with the unit should get checked.  Everything that is unchecked is considered non-taxable.


One little check box changes everything… ‘Group Unit Items’.  This should only be used in states that have multiple tiers to your sales tax rates.

What this check box is for is when you have multiple tiers for a given tax, and the unit and its corresponding items need to go through that as a ‘grouped’ item, you check this box.  For example, we already stated that Florida counties stop taxing after the first $5000…  so if I have a Unit that is $4900, with $300 Freight, and $800 of Installation…  is that all grouped as a lump sum ( so $6000 goes through, and we charge the rate on the first 5K ) OR does it go through separately ( $4900 taxed, then $300 taxed, then $800 tax – none of which go over the threshold, so all of it is charged the county rate ).  If you do the math on 1% – that makes a decent difference in tax to your customer – and he’ll want to pay the least amount he can.

Hopefully that sheds a little light on the subject, and helps you figure out how to set up your taxes.


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