Handling Federal Excise Tax in Business Central


I currently have a client in the alcoholic beverage wholesale industry that is implementing Dynamics 365 Business Central, and they need federal excise tax to be a flat charge; not a percentage rate. They incur the tax in one of two scenarios:

  1. At the time of sale (shipping to customer directly from in-bond warehouse)
  2. When moving goods from an in-bond to a tax-paid warehouse

In a third scenario, the client does not incur, nor do they need to track FET:
3. Drop-ship to customer directly from overseas, client does not handle tax, does not need to track. Customer pays FET.

They do not pay FET more than once. Has anyone encountered this before, or know of any solutions, or had to deal with that scenario before? Avalara said they don’t deal with excise tax at the federal level.

DrinkIT has a solution for this. Also, there are some wine distribution add-ons that may handle this. Most of these are complete solutions that cover multiple aspects of BC.

I understand your client’s requirement for federal excise tax to be a flat charge instead of a percentage rate.

In order to achieve this, you can create a separate tax code for federal excise tax with a flat charge amount instead of a percentage rate.

For the first scenario where the tax is incurred at the time of sale, you can create a sales order for the customer and use the tax code with the flat charge amount for federal excise tax.

For the second scenario where goods are moved from an in-bond to a tax-paid warehouse, you can create a transfer order and use the same tax code with the flat charge amount.

For the third scenario where FET is not incurred or tracked, you can create a separate customer card for that customer and exclude the FET tax code from their setup.

If you are having trouble finding a solution or need further assistance, we recommend consulting with a Dynamics 365 Business Central expert who can guide you through the setup process.

I hope this helps! Let me know if you have any further questions.