Use this window to define and maintain the report codes necessary to report tax withholdings separately for federal and state purposes. These codes can be used only by companies for which the Use Tax Type VAT check box is cleared and the Supplement Report Codes to Tax Withholding Lines check box is selected on the Enterprise/Company/Invoice/Tax Information tab. This window was designed primarily to support IRS Form 1099 reporting requirements in the United States.
The report codes are used to designate withholding tax lines on registered invoice lines. A separate report code is required on tax lines whose tax code has the Tax Withhold tax type.
Tax withholdings for suppliers are reported to the appropriate tax authorities according to the specified report codes. In the United State is Federal tax always reported as type 4. Tax withholdings for up to two states in the United States can be reported using types 16A and 16B. You can specify additional types to accommodate changes in tax law.