SAP Business One in the United States: sales tax and 1099

SAP Business One runs in the United States on an official SAP localization. Two things shape the ERP for a US company: sales and use tax, set by states and local governments, and Form 1099 reporting of vendor payments. This page covers both, plus tax engines, e-invoicing and a SQL query to check sales tax before you file.

I am Zain Abbas, a SAP Business One developer with more than 7 years of SAP B1 work for companies in 13 countries. I have not delivered a project for a US company yet, so this page is not a case study. It is written from my work on SAP B1 tax and e-invoicing elsewhere, and the US rules come from the IRS, the Supreme Court and SAP’s own documentation, linked at the end.

What does the USA localization of SAP Business One cover?

The localization is chosen when the company database is created and cannot be changed later, so a US company belongs on the USA localization from day one. SAP’s tax guide (version 1.2, June 2026, for release 10.0 and the HANA version) and help pages document:

How does US sales tax work for an ERP?

The US has no federal VAT or sales tax. Sales and use tax come from states and often from counties, cities and special districts, so one invoice can carry several stacked rates that depend on the delivery address.

Economic nexus after Wayfair

Until 2018 a state could only make a seller collect its sales tax if the seller had a physical presence there. On 21 June 2018, in South Dakota v. Wayfair, the Supreme Court overruled Quill (1992) and National Bellas Hess (1967). The South Dakota law it upheld covered sellers that each year deliver more than USD 100,000 of goods or services into the state or make 200 or more separate transactions there. States now set their own thresholds, and they differ.

Nexus is a tax decision, not an ERP setting. In SAP B1 you collect only where you are registered: other ship-to addresses get a 0% tax code or, with Tax Service, Tax Service Enabled = No. And keep addresses clean, because a wrong ZIP code is a wrong tax amount.

Exemption certificates

Buyers purchasing for resale, and exempt organisations, give the seller an exemption certificate. Under the Streamlined Sales and Use Tax Agreement, a seller in a member state that obtains a complete certificate at the time of sale or within 90 days is relieved of the tax if the exemption proves invalid, and must keep records of exempt sales for the state.

SAP’s US tax guide does not describe a place to store the certificates, so they usually live outside the ERP. In SAP B1 I would mark the customer as exempt, keep the certificate number and expiry date in user-defined fields, and block an exempt A/R invoice with a missing or expired certificate in SBO_SP_TransactionNotification.

SAP warns that a 0% tax code shows the amount as taxable in the Tax Report, while an exempt customer, exempt item or Tax Liable = No shows it as non-taxable. Pick one method.

Where do tax engines like Avalara and Vertex fit?

Maintaining rates for thousands of jurisdictions by hand is the hard part. Two routes:

1. SAP’s Tax Service with one documented provider, Avalara Rates by Address (free under a fair usage policy after registering with Avalara). SAP B1 sends each row’s ship-to address through EDS and creates a system tax code such as “#90245SM”, containing the ZIP code. Limits: domestic partners only, no min/max or flat tax amounts, and offline it falls back to tax code determination.
2. An external tax engine. Since 9.3 PL11, the setting Allow External Calculation of Sales Tax (SAP Note 2771989) lets documents created through the DI API or Service Layer carry tax calculated outside SAP B1. That is the hook for full engines such as Avalara’s paid products or Vertex. Ask the vendor whether a ready SAP Business One connector exists: Vertex’s public SAP pages, for example, list ECC, S/4HANA and ByDesign rather than Business One.

These are integration options, not recommendations; rate lookup, return filing and certificate management are separate services.

What does Form 1099 reporting require?

US businesses report certain payments to non-employees and vendors on IRS information returns. The two that matter in accounts payable:

• Form 1099-NEC for nonemployee compensation. Under the One, Big, Beautiful Bill Act the threshold rose from USD 600 to USD 2,000 for payments made in 2026, with inflation adjustment possible from 2027. Due to recipients and the IRS by 31 January.
• Form 1099-MISC for other payments. Rents and other income also moved to USD 2,000; royalties stay at USD 10 and gross proceeds to attorneys at USD 600.

Card and third-party network payments go on Form 1099-K from the payment settlement entity, not from you. Collect each payee’s TIN on Form W-9. If you file 10 or more information returns in total, you must e-file (returns due on or after 1 January 2024, all types counted together) through IRIS or FIRE.

The 1099/1096 report in SAP Business One

The report sits under Financials > Financial Reports > Accounting. You assign a 1099 form and box on the vendor and can change it on the A/P invoice; once paid, the invoice is included. It summarizes by vendor or by form and box, can include payments not based on invoices, and shows the vendor’s Federal Tax ID.

Before year end, update box minimums to the new thresholds and check that every 1099 vendor has a Federal Tax ID.

Is e-invoicing mandatory in the United States?

No. No federal rule requires B2B e-invoices, which is the main difference from the clearance systems I have built in other countries.

What exists is an industry framework. After an E-invoice Exchange Market Pilot by the Business Payments Coalition, supported by the Federal Reserve, participants set up the Digital Business Networks Alliance (DBNAlliance) in 2023 to govern an exchange framework. Businesses connect through certified service providers acting as access points, a model similar to Peppol.

For an SAP B1 company this is optional. If a large customer asks for it, you need a certified provider and an integration that sends A/R invoices from SAP B1.

How do I check my sales tax figures in SAP Business One?

The Tax Report shows tax by jurisdiction or tax code. Before I trust it, I reconcile it with the documents. This query sums taxable amount, non-taxable amount and tax per tax code for one quarter, A/R invoices minus credit memos, without cancelled documents.

-- SQL Server: sales tax per tax code, A/R invoices minus credit memos (July to September 2026)
SELECT X.TaxCode, T1.Name AS TaxName, T1.Rate,
       SUM(X.Taxable)    AS TaxableAmount,
       SUM(X.NonTaxable) AS NonTaxableAmount,
       SUM(X.TaxAmount)  AS TaxAmount
FROM (
    SELECT L.TaxCode,
           CASE WHEN L.TaxStatus = 'Y' THEN L.LineTotal * (1 - H.DiscPrcnt / 100) ELSE 0 END AS Taxable,
           CASE WHEN L.TaxStatus = 'N' THEN L.LineTotal * (1 - H.DiscPrcnt / 100) ELSE 0 END AS NonTaxable,
           L.VatSum AS TaxAmount
    FROM OINV H INNER JOIN INV1 L ON L.DocEntry = H.DocEntry
    WHERE H.CANCELED = 'N' AND H.DocDate BETWEEN '20260701' AND '20260930'
    UNION ALL
    SELECT L.TaxCode,
           CASE WHEN L.TaxStatus = 'Y' THEN -L.LineTotal * (1 - H.DiscPrcnt / 100) ELSE 0 END,
           CASE WHEN L.TaxStatus = 'N' THEN -L.LineTotal * (1 - H.DiscPrcnt / 100) ELSE 0 END,
           -L.VatSum
    FROM ORIN H INNER JOIN RIN1 L ON L.DocEntry = H.DocEntry
    WHERE H.CANCELED = 'N' AND H.DocDate BETWEEN '20260701' AND '20260930'
) X
LEFT JOIN OSTC T1 ON T1.Code = X.TaxCode
GROUP BY X.TaxCode, T1.Name, T1.Rate
ORDER BY X.TaxCode

-- SAP HANA version
SELECT X."TaxCode", T1."Name" AS "TaxName", T1."Rate",
       SUM(X."Taxable")    AS "TaxableAmount",
       SUM(X."NonTaxable") AS "NonTaxableAmount",
       SUM(X."TaxAmount")  AS "TaxAmount"
FROM (
    SELECT L."TaxCode",
           CASE WHEN L."TaxStatus" = 'Y' THEN L."LineTotal" * (1 - H."DiscPrcnt" / 100) ELSE 0 END AS "Taxable",
           CASE WHEN L."TaxStatus" = 'N' THEN L."LineTotal" * (1 - H."DiscPrcnt" / 100) ELSE 0 END AS "NonTaxable",
           L."VatSum" AS "TaxAmount"
    FROM OINV H INNER JOIN INV1 L ON L."DocEntry" = H."DocEntry"
    WHERE H."CANCELED" = 'N' AND H."DocDate" BETWEEN '20260701' AND '20260930'
    UNION ALL
    SELECT L."TaxCode",
           CASE WHEN L."TaxStatus" = 'Y' THEN -L."LineTotal" * (1 - H."DiscPrcnt" / 100) ELSE 0 END,
           CASE WHEN L."TaxStatus" = 'N' THEN -L."LineTotal" * (1 - H."DiscPrcnt" / 100) ELSE 0 END,
           -L."VatSum"
    FROM ORIN H INNER JOIN RIN1 L ON L."DocEntry" = H."DocEntry"
    WHERE H."CANCELED" = 'N' AND H."DocDate" BETWEEN '20260701' AND '20260930'
) X
LEFT JOIN OSTC T1 ON T1."Code" = X."TaxCode"
GROUP BY X."TaxCode", T1."Name", T1."Rate"
ORDER BY X."TaxCode"

Notes from running checks like this:

• Cancellations. CANCELED = ‘N’ drops both the cancelled document (‘Y’) and the cancellation document (‘C’) SAP B1 creates for it.
• Header discounts. LineTotal is before the document discount, hence DiscPrcnt. See header discounts and sales totals.
• Freight. Freight tax sits in the freight tables, not INV1; compare with the Taxable Freight column of the Tax Report.
• Jurisdictions. A state return needs the state part of each code; run the Tax Report by jurisdiction for that.

Test it on a quarter you have already filed before relying on it. The SAP B1 table reference lists OSTC and the other tables used here, and the SQL to HANA converter rewrites SQL Server queries for HANA.

Which ERP and accounting systems are common in the US?

Small companies often start with QuickBooks or Xero and move to NetSuite, Business Central, Sage Intacct, Acumatica or SAP Business One when inventory or multi-state tax outgrows them. Our ERP selector is a neutral starting point.

What can Kodenova do for SAP Business One users in the US?

I work remotely from Pakistan, 10 hours ahead of US Eastern time in winter and 9 in summer. The realistic overlap is the Eastern morning, roughly 8:00 to 12:00, which is my evening; with the West Coast it is an hour or two, so work runs mostly asynchronously with a short daily call. What I do:

• Add-ons inside SAP B1 with the UI API and DI API. See the add-on development guide.
• Integrations through the Service Layer: web shops, CRM, tax engines, banks and payment tools. See the Service Layer guide.
• Validation rules in SBO_SP_TransactionNotification, such as blocking an exempt invoice without a valid certificate or a 1099 vendor without a Federal Tax ID. See the TransactionNotification examples.
• Portals for staff, customers or suppliers without a full SAP B1 licence.
• Queries, reports and SQL Server to HANA migration. See the migration guide.
• AI on top of SAP B1: an MCP server so ChatGPT or Claude can answer from live SAP data, with permissions.

To be clear about scope: I do not sell a tax engine or a 1099 filing service, and I do not give tax advice; nexus, registrations and filings belong with your tax adviser. Kodenova is not an SAP partner and does not resell licences; if you have a partner for licences and support, I work alongside them on development.

Sources

• SAP Help Portal: How to Manage Sales and Purchasing Tax in the US Localization (v1.2, 2026-06-17, PDF)
• SAP Help Portal: How to Use Tax Service in the US Localization of SAP Business One (v5.0, 2025-02-02, PDF)
• SAP Help Portal: 1099/1096 Report (SAP Business One)
• SAP Help Portal: 1099/1096 Report - Selection Criteria
• IRS: Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026)
• IRS: E-file information returns
• South Dakota v. Wayfair, Inc. (2018), Supreme Court opinion text (Cornell LII)
• Streamlined Sales and Use Tax Agreement, as amended through 20 May 2025 (PDF)
• FedPayments Improvement: Electronic invoices (Business Payments Coalition exchange framework)
• Digital Business Networks Alliance (DBNAlliance)

Related services

• SAP Business One development
• Web & B2B portals