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Cascading rules overview

You can use cascading rules to create a rate and rule or fee and rule combination that's used by the logical child authorities of a parent authority and the owning authority itself.
Each cascading rule specifies an authority type (either all or a specific type such as County Sales/Use Tax); otherwise the same configuration's available for a standard rule. You can set up custom cascading rules that either point to a standard rate or fee or a cascading rate or fee.
Products assigned to child authorities follow the parent authority taxability unless another rule's created on the child product instructing it to do otherwise. Most states have cascading rules set up to apply standard statewide (parent) sales and use taxes to all local jurisdictions (child).

Zone Hierarchy

Zones are a hierarchical representation of U.S. geographic areas that include country, states, counties, cities, ZIP Codes, and geocodes (zip +4), in descending order. You can assign each of these zones to one or more taxing authorities, which in turn have rates and rules assigned to them.
Rules that apply across an entire state are entered in state authorities, rules that apply to a specific county are entered in county authorities, and so on. Cascading rules can only be associated with the country and state authorities, but the rules are inherited by the child authorities, as explained above.

Rules are Calculated in Order

ONESOURCE Determination provides thousands of products in ONESOURCE content. Each product has a unique identifying commodity code in the United States.
Each product also has an identifying rule code, generally a four-digit number followed by a decimal and an additional digit to signify the tax type. ONESOURCE Determination evaluates rules in ascending order, so it is important to assign the correct rule order when creating a rule.
ONESOURCE content manages rules numbered 5000 or greater. Rules reflect 3 taxing options in the U.S.: consumer's use (.1), seller's use (.2), and sales tax (.3). If they are cascading rules, the tax types are denoted with a .6, .7, and .8, respectively. For example, the 4 digit rule order for poster boards is 5211. The consumer's use tax rule is represented by 5211.1 and the cascading consumer's use tax rule would be 5211.6.
Exempt rules (those for which no tax is required) are designated by selecting
Exempt
 from the
Rule Option
 dropdown menu. Exempt rules typically don’t have a decimal number following the rule code. If a cascading rule is created on an exempt rule, it is designated with .5.
Custom rules are created using a rule code between 1-4999 so that they always take precedence over ONESOURCE content.
International authorities don’t use cascading rules in ONESOURCE content.

Custom Rule Order has Precedence

If you want to override ONESOURCE content results for all authorities of a similar authority type, you would add custom rules at the state or country level. You must be aware of other custom rules you have created. The rule code you assign to a product not only must be lower than 4999, but must also be lower than the rule code you want to override. With a lower number, ONESOURCE Determination will calculate it before the rule you want to override.

How do cascading rules apply to authorities?

An example of cascading rules that apply to all transactions: The zones hierarchy shows an example of Westville, a city in Oklahoma. Westville is a child of Adair county, which is in turn a child of the state of Oklahoma. The ZIP Code of 74965 is a child of all of these zones. To apply state-level Oklahoma rates and rules to all zones below it, a cascading rule must be created on the state level:
The Oklahoma State Sales/Use Tax authority gets attached at the state level of the Oklahoma zone, which is typical for most states. Using the standard sales/use tax authority, any rules entered at this level would apply to state-level transactions, and selecting
Cascading
 applies the rules to all children by default.
You can view the tax results in a model scenario. The assigned rate code ST assigns this rule to each of the ST rates entered on child authorities: 4.5% state, 0.75% county, and 3.75% city.
When the appropriate commodity code (82131603) is entered in the model scenario for the video production product, and the shipping locations are placed in Westville, OK, you'll see the desired results. In the
Authority Messages
 section:
  • Rule order 5713.3 signifies that the state-level rules are applied, as shown by the state authority.
  • Rule order 5713.8 appears on the following 2 lines for county and city authorities, signifying that a cascading rule has been applied.

This article applies to:

  • Product: ONESOURCE Determination, ONESOURCE Indirect Tax
  • Subject: Authorities

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