California Agriculture exemption tax

This article provides instruction and information on setting up California Agriculture exemption tax.

• Creating a department
• Assigning the department
• Assigning tax definitions
• Assign agriculture tax exemption to all qualifying clients

Creating a department

1. In Paladin, from the main menu, select File > Setup.
2. Select the Dept tab.
3. Under the ID and Name field, click New.
4. In the Name box, enter AG ITEMS.
5. Enter a number in the Department label number box. For this article, 333 is used.
6. In the field under the Name box, check County non-taxable and City non-taxable.
7. Click Save, then click Close.

Figure 1: New Department setting

Back to Top

Assigning the department

1. In Paladin, on the top ribbon, select the Inventory module.
2. Select the General tab.
3. In the Item Information pane, assign the newly created AG ITEMS department code to all qualifying tax-exempt agricultural items by selecting the department you created from the Dept: list.
4. Click F12 Save, then exit out of the Inventory module.

Figure 2: Department assigned

Back to Top

Assigning tax definitions

To create state and county tax rates:

1. In Paladin, from the main menu, select File > Setup.
2. Select the Taxes tab.
3. In the Tax Definitions pane, create a State tax labeled CALIFORNIA and set the percentage to the combined state and county taxable rate for the store’s location. It’s typically somewhere between 7.25% and 10.5% depending on the geographical location.  For this article, we will use 7.5% as our combined state and county tax rate.
4. Enable State.
5. Click New.
6. In the Name box, enter CALIFORNIA.
7. Enter 7.5 in the Tax % box.

Figure 3: Tax Definitions/CALIFORNIA

8. Click Save. 
9. The Confirm Tax Changes window opens.

Figure 4: Confirm Tax Changes window

10. Click Yes.
11. Using the same steps above, create a second State tax labeled CALIF_AG and set the percentage to the total of the CALIFORNIA tax rate less the 5% agricultural exemption. In this case the amount would be 2.5%.  Formula: 7.5% – 5% = 2.5%.

Figure 5: Tax Definitions/CALIF_AG

12. Using the same steps above, but enabling County, create a County tax labeled AG_EXEMPT and set the percentage to 5%, or the amount equal to the agriculture exemption amount.

Figure 6: Tax Definitions/AG_EXEMPT

13. Under the Tax Settings pane, set the Default State tax to CALIFORNIA, and set the Default County tax to None.

Figure 7: Tax Settings/Default State tax/Default County tax

14. Click Close. 
15. The Confirm Tax Changes window opens.
16. Click Yes.

Back to Top

Assign agriculture tax exemption to all qualifying clients

1. In Paladin, on the ribbon, select the Customer module.
2. Press F8 to edit tax information.
3. In the Tax Window, set:
   1. State: CALIF_AG
   2. County: AG_EXEMPT
   3. City: Default (None)

Figure 8: Tax window

The information is reflected under the Tax Information pane.

Figure 9: Customers module/Tax Information

4. Click F12 Save, then exit out of the Customers module.
5. In Paladin’s Invoice/Quote module, test and verify the following taxable amounts.

No customer selected in invoicing:

• • Regular items show a 7.5% tax
  • Agriculture items show as a 7.5% tax

Customer is selected in invoicing that qualifies for agriculture exemption:

• • Regular items show a 7.5% tax
  • Agriculture items show as a 2.5% tax

Back to Top