Tax Related Implementation considerations for oracle order Management

I recently had the following learning experience related to Tax and Order Management

Here are few Setups from OM side which would impact Taxes

Tax Event at the Transaction type :-This determines whether Taxes needs to be calculated during order entry or booking or at invoicing .

If oracle has the option of calculating Tax @ Order Entry ,Why would not take advantage of that and enable Tax @ Order Entry Itself  so that you can communicate the Taxes to your customers in the order acknowledgement etc .That what i thought too .

However there are few Product Limitations oracle Has .One of the Biggest Limitation is Oracle DOES not calculate Taxes for Any charges applied on the Order or at the order Line .Well ,That's crap isn't ? Yes it is .But that's what oracle call it as Limitation .

Let me expand on what it means ,Assume you have an order which has and item and item Unit selling Price is 1200 Dollars and assume you applied a Freight charge of 100 Dollars .Tax will be calculated only for 1200 dollars ,Instead of 1300 dollars which is wrong

Well ,What would the Invoice look like ? Will the Tax be calculated for 1200 or 1300 ?

Tax can get calculated for 1300 with Few setups enabled .

Oracle basically calculates Tax only for Revenue which makes sense ,But by default any Charges like freight /or any other charge type will be Invoiced to AR as freight (Little technical with LINE_TYPE as FREIGHT ,But Tax will be calculated for only Line_Type as LINE.)

So oracle gives the following Option ....

OM System Parameter Value Invoice Freight as Revenue set to Yes and Inventory Item for Freight to be tagged to an item of item type Freight

This means ,Whether you want to Invoice Freight or any other charges as revenue ,If Yes...Any charges on the order/line will be interfaced to AR with line type as LINE and hence Tax will be calculated for charges too .

You would also need to define an Item of Item Type FREIGHT and Tag the item to the OM System Parameter Value Inventory Item for Freight

In Short ,I would say ask the following questions for your implementation considerations

Will My orders will have any charge modifiers ? ,Please be aware Taxes are NOT calculated for     charges at Order Entry and this means if you enable Tax event as Order Entry ,There might
always be mismatch between order and invoice Tax

Wouldn't sound crazy if you use i Store and your customers will see different Tax during order placement and a different tax value when you send the invoices for the orders which has charges in it ?

So if you orders are going to have some type of charge modifiers ,I would say better chose the Tax event as INVOICING and have the tax calculated only at Invoice level.