Use Tax ProceduresSales/Use Tax SetupFinance-Setup-General-FiscalRequisitions will automatically encumber sales/use tax if the requisition is marked for tax. The actual tax rate is defaulted from the Fiscal setup shown below. While there are three possible tax rate fields, there is no need to separate the different tax rates on the screen. Use the State Tax Rate field as shown below.

There are districts where receiving locations may have a different tax rate than the general tax rate. The West Sonoma High District is one. The overall tax rate is 9.0 shown on the screen shot above but when items are delivered to the El Molino High School site the tax rate should be 8.25.The Escape Organization Record allows Escape to know the sites where the tax rates are different and provides an override field for use with the requisition/purchase order locations.

Escape path: System – Setup – Organizationso Locations Tab

The tax override on the location tab only needs to be entered if the tax rate for a specific delivery location is not the same as the system default.

Use Tax Page 1

Requisition with Sales/Use Tax SetupFinance – Requisitions – Vendor Requisitions

The requisition shown above is set to be delivered at the El Molino High Site. The initial tax rate will be determined by the delivery location 95% of the time there will not have to be a tax adjustment made

The internal tax flag on the requistion Item tab is set to Yes. This means the system will automatically adjust the item amount by any tax factor as the requisition is set up. Usually supply requisitions will have this flag set to Yes.

Use Tax Page 2

AAdditional Shipping and Handling can be added as an additional line item on the requisition if known at the time the requisition is established

Shipping and Handling can also be added on the first requisition tab on the initial requisition screen tab

Payment of the Requisition and the Sales/Use Tax OptionsFinance – AP - PaymentsIf the requisition is marked Yes for sales tax but the payment is made with the tax rate owed and tax rate collected as the same, the encumbered taxes do not move to the object 9580 because the system assumes the tax is included in the invoice amount paid to the vendor. Example AWhen the Tax Rate Owed is the same as the actual tax requested from the vendor, you will not need to make any changes to the payment screen. In the example below 8.25 is the correct rate for the El Molino High location and the item was received at the El Molino High site where the tax rate is 8.25. The vendor charged 8.25 % based on the purchase order.

95% of your vendor payments will follow this pattern.

Use Tax Page 3

As the payment is made the system will: Create a payment to the vendor (Expense account) for $1000.00

o This process will not adjust the vendor’s payment. The vendor will still receive the $1000.00 as invoiced.

Charge the Cash for the full $1000.00

Example BWhen the Tax Rate Owed is different from the actual tax charged by the vendor, you will need will to enter the correct % in the Tax Rate Collected field. In the example below 8.25 is the correct rate for the El Molino High location but this item was received the Analy High site where the tax rate is 9.00. The vendor only charged 8.25 % based on the purchase order.

To adjust this Vendor payment you would: Enter the 8.25 in the Tax Rate Collected field

o The system automatically calculates the additional tax needed (6.93)

Use Tax Page 4

As the payment is made the system will: Create a payment to the vendor (Expense account) for $1000.00

o This process will not adjust the vendor’s payment. The vendor will still receive the $1000.00 as invoiced.

Charge the Cash for the full $1000.00 Charge the expense account $6.93 Charge the Use Tax account (9580) $6.93

Example C

If the Tax Rate Owed is different from the actual tax charged by the vendor, you will need will to enter the correct % in the Tax Rate Collected field. In the example below 8.25 is the correct rate for the El Molino High location and the item was received at the El Molino High site. The vendor should have charges the full 8.25 rate as was included on the purcahse order. However, this vendor only changed 7.25 %.

To adjust this Vendor payment you would: Enter the 7.25 in the Tax Rate Collected field (amount from the actual vendor

invoice)o The system automatically calculates the additional tax needed (9.32)

Use Tax Page 5

As the payment is made the system will: Create a payment to the vendor (Expense account) for $1000.00

o This process will not adjust the vendor’s payment. The vendor will still receive the $1000.00 as invoiced.

Charge the Cash for the full $1000.00 Charge the expense account $9.32 Charge the Use Tax account (9580) $9.32

ExampleD

Another way to adjust the tax rate is to use the Unpaid Tax Amount field. In our example below we entered the $10.00 in the field. You will need to calculate this amount. It should be the same calculation as the system uses. (tax rate owed – tax rate collected)

Note that the Unpaid Tax Calc Override field changed from No to Yes. This means that you have told the system that you do not want the system to look at the difference between the Tax Rate Owed and the Tax Rate Collected. You want the system to use the $10 as the amount to be booked to the 9580 account.

Use Tax Page 6

If you have used the Unpaid Tax Amount method you cannot go back and change your entry to use the Tax Rate Collected method. The system will remember the initial entry and always go by that Use Tax setup.

As the payment is made the system will: Create a payment to the vendor (Expense account) for $1000.00

o This process will not adjust the vendor’s payment. The vendor will still receive the $1000.00 as invoiced.

Charge the Cash for the full $1000.00 Charge the expense account $10.00 Charge the Use Tax account (9580) $10.00

Use Tax Page 7