Wondering if anyone has any recommended method for accruing Use Sales Tax?
Right now this is a manual process of our AP clerk reviewing all invoices for items the require us to pay state sales tax on, like shop supplies, and then records these items on a spreadsheet. Then quarterly she uses this spreadsheet to know how much Use Tax we need to pay the state. Our CFO would like to improve this process and accrue the sales tax, in a GL account, when the invoice is entered.
I looked at using the Tax codes that are available in AP Invoice entry, however, the seems to increase the total amount of the invoice due to the vendor, which is not what we are after.
Norm - Take a look at the TaxEngine edu course documents. It goes through setting up AP Invoice sales tax as well.
I haven’t needed to do this, but it seems that setting the collection method in Tax Type Maintenance to “Witholding” would work (instead of “Invoicing”). Epicor should put the use tax in the accrual GL account, so your AP person wouldn’t need to manually track them anymore.
Create a Tax Type Invoicing – The tax amount is added to the amount shown on the invoice and is collected by the supplier, as part of the total invoice value. The supplier collects and pays the taxes to the authorities. The tax amount is usually separately specified on the invoice, and if needed, it can be included in the amount charged for the item. Withholding – The purchaser is required to withhold a portion of the amount invoiced and pay this to the authorities. These types of taxes are collected and paid by the purchaser on behalf of his supplier’s tax liability.
From the help file on Tax Types:
Another type of tax is Use Tax. Levied in the United States locality, this internal corporate tax is self-assessed when a product is purchased by a resident of the state that issues the tax. It does not affect the invoice total, but it does affect the general ledger. Use tax is strictly to account for storage and consumption of goods used internally by the company in a specific state (not for resale).
I saw the different option for the tax codes, including self-assessed & withholding, but at firsted look these didn’t seem to work as expected. Once I’m done with processing W-2s and 1099, I might have time to review these and fully test it out.