Set Up Tax Rates
- In the CPT4 Codes master file, define a CPT4 code to use as a tax line item charge. For example, you could define procedures for state sales tax, city sales tax, country sales tax, and local sales tax.
You must define codes to use as tax charges for the default Tax Rate library.
Note: You will need to create SIM codes for each level of sales tax, such as state, country, local, that could apply.Five levels of locality tax rates are as follows:
- State Tax %
- County Tax %
- City Tax %
- City Local Tax %
- County Local Tax %
If necessary, define codes to use as tax charges for specific locations that will not use the default Tax Rate library (for example, locations within states that apply tax rates according to unique tax rules for that location).
- In the Service Items library that will be used when charges are posted for the practice, create a new SIM if necessary (or select an existing one) and attach the tax rate CPT4 code from step 1 to the SIM in the CPT4 Code field.
Note: If the default tax rate library will be applied to multiple locations, you should use generic tax SIM codes. For tax rate libraries that are defined at the location level, you can specify tax charges by state.
(Optional) If the practice wants to report on taxable items, create a department for the taxes in the Departments master list and apply it to the SIM.
- Open the Departments master list, select Open Menu, and then select New.
- In the Master List Defaults tab, enter a name, for example, State Taxes, and then select OK.
- Then, open a SIM in the Service Items library and select the department in the General tab > Department field.
Define whether the tax rate will be applied at the line item level for specific payers.
- Open a Payer master file, and then select the Defaults-2 tab.
- Select the Add tax line item per service line check box to indicate that the tax rate applies at the line item level. Each taxable charge entered for this payer will have an associated tax line item attached.
Note: If this option is not selected for the payer, the system applies the tax rate at the encounter level as one summed line item.
- Create a new library in File Maintenance to define the tax rate.
- Enable the tax rate functionality at the practice level and select which Tax Rate library the practice uses.
- Open Practice Preferences > Charge Entry Preferences.
- Select the Tax Rate check box, and then select a Tax Rate library in the associated field.
If necessary, select which Tax Rate library each location uses.
- Open a Location master file, and then select the Defaults-2 tab.
- Select a Tax Rate library in the Tax Rate field. This field displays only when the tax rate is enabled in the Charge Entry practice preferences.
Note: The Tax Rate library selected in the Location master file overrides the library selected in the Charge Entry practice preferences.