Description

Use tax is a tax on all tangible property and certain services purchased or rented without a sales tax equal to the State, County or City retail tax. Sales tax is normally collected by the seller or renter but Use Tax is usually paid by the buyer. Some common examples are purchases from vendors on which tax should have been billed but was not.

Setting up

Use Tax

1. In the Data Plus main menu, 'File Maintenance' - 'Company Information', you can fill in the "Taxing State" field. This is the same as the Company's state information.

2. In 'General Ledger' - 'File Maintenance' - 'Chart of

Accounts' search for the Use Tax account or any other account

you wish to designate as a Use Tax account.

There are two fields that reference Use Tax: "Use Tax Account? " and "Apply Use Tax?"

The question "Use Tax Account?" Is asking if this account will be used to record any Use Tax liabilities. All accounts for which this flag is set to yes will be included on the Use Tax liability report.

The question "Apply Use Tax?" Is asking if use tax will normally be applied to this account. This is what will default on your invoice entry screen.

Example 1: To setup your Use Tax payable liability account, "Use Tax Account?" will be "Yes" and "Apply Use Tax?" will be "No".

Example 2: When setting up an expense account that MAY use the Use Tax, the question "Use Tax Account?" Should be "No" and "Apply use tax?" (Yes/No) is what will default in your invoice entry screen regarding Use Tax. It is recommended to leave as "No" unless this account will ALWAYS have use tax applied to it, unless you manually change the 2 use tax questions to "No" when entering invoices.

Once you have filled out these fields press <F2> to save.

3. In 'Accounts Payable' - 'File Maintenance' - 'State Information', you can setup your taxing state information and the tax rate. The system allows you to setup multiple states, if you are a multi property database in different states.

4. In 'Accounts Payable' - 'File Maintenance' - 'Parameters', you can setup the default Use Tax account number in the *"Use Tax"* field. Also in 'File Maintenance' - 'Vendors', you can setup the default Use Tax liability account number for certain vendors, if this is left blank it will default the Use Tax liability account from parameters.

Invoice Entry
1. When setting up an invoice for Use Tax there are two fields you should fill in.

On the transaction there is the "Calc Use Tax" field if you wish to calculate the Use Tax answer "Yes".

The “Use Tax Exclusion” field is used to enter an amount to be excluded from the calculation of the amount and distribution of any Use Tax amount. A typical example of an excluded amount would be shipping which is not subject to tax.

Example: Invoice amount is $100.00 and the Use Tax exclusion is set to $15.00. The Use Tax will then be calculated on the remaining $85.00 and distributed to the applicable expense line items in an amount proportioned to their part of the total.

On the 'Line Item Distribution' screen there is the same field, if you wish to have it calculate for this particular distribution answer "Yes". You can have multiple distributions for the same invoice and choose which distribution you want to calculate.

Once this information is setup you can then run your edit list, as shown below, and the system will automatically calculate the Use Tax based on the state's percentage.