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Sale/Use Tax Purchase Invoice

  • 1.  Sale/Use Tax Purchase Invoice

    Posted Aug 10, 2020 04:01 PM
    How do you enter purchase orders/purchase invoices, when the vendor is charging sales tax and you are going to pay the vendor, but your company is exempted from the tax.

     (when the vendor doesn't charge but the company owes I know you can to checkmark the "Use tax")
     #Functional #NAV2013R2

    ​​​

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    Elizabeth Harrison
    Diamond T Services, Inc.
    Golden CO
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    Academy - Online Interactive Learning from Experts


  • 2.  RE: Sale/Use Tax Purchase Invoice

    Posted Aug 11, 2020 12:52 AM
    Hi @Elizabeth Harrison

    if the vendor is sending you an invoice with sales tax and you're exempt then I would just short pay the invoice and send them the tax exempt form for them to correct on their end. ​

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    Kristen Hosman
    Dynamics 365 Business Central Senior Consultant
    Boyer & Associates
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    Academy - Online Interactive Learning from Experts


  • 3.  RE: Sale/Use Tax Purchase Invoice

    Posted Aug 12, 2020 08:02 AM
    Hi Elizabeth,

    My organization is exempt in many states, and I confirm that Kristen's approach is appropriate. Enter the invoice without the sales tax and include a sales tax exemption form in with the remittance. If you pay the vendor electronically, you may want to contact them and provide the exemption form prior to paying the invoice.

    Blessings,

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    Ken Elliott
    Director, Financial Operations
    Billy Graham Evangelistic Association
    Charlotte NC
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    Academy - Online Interactive Learning from Experts


  • 4.  RE: Sale/Use Tax Purchase Invoice

    Posted 27 days ago
    Sometimes the purchases are made with credit cards in the field that do not have our exemption.

    we have been tracking use tax that we need to pay and credits we need in a work sheet.
    but are wanting to just enter in NAV

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    Elizabeth Harrison
    Diamond T Services, Inc.
    Golden CO
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    Academy - Online Interactive Learning from Experts


  • 5.  RE: Sale/Use Tax Purchase Invoice

    Posted 26 days ago
    @Elizabeth Harrison,

    Is your main goal to be able to report on sales tax paid so you can claim the tax paid for reimbursement? If you are identifying it when ​you are entering a Purchase Invoice for the credit card, perhaps create a Tax Group Code specific to purchases where tax was incorrectly charged. Then you could filter on the Tax Group Code when running the Sales Tax Collected report. Also, if you have the system calculate the sales tax that was charged instead of entering it as a flat amount in the amount field, you'll get the purchase amount and the specific tax amount.

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    Amanda Mayer
    NAVUG All Star
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    Academy - Online Interactive Learning from Experts


  • 6.  RE: Sale/Use Tax Purchase Invoice

    Posted 23 days ago
    Elizabeth,

    It sounds like you are asking two things. (1) Is there a way in NAV to track sales tax paid on a credit card transaction where the merchant did not have your exemption certificate, and (2) is there a way in NAV to track use tax that you owe.

    As a nonprofit in NC, these are both things that we experience daily. Our solution has been to leverage the Tax Group Codes as described by Amanda Mayer. For #1 above, we have set up a Tax Group Code that debits a receivable account, and the associated tax area codes have been set up with the applicable sales tax rates. Then, we simply enter the Tax Group Code and Tax Area Code on the purchase invoice lines where applicable. Then, we run a report for the claim period to get the purchases amount and the tax amount for the refund. For #2 above, we have set up another Tax Group Code ​​for which we set up the Tax Area Code rates to be zero. Entering these on the purchase invoices does not result in any calculation or entry, but it does tag the transactions where use tax is applicable. Then, we run a Jet report each month that pulls those tagged transactions with their purchase amounts and the standard sales tax rates (a different Tax Group Code) for each corresponding Tax Area Code in order to calculate the use taxes. We use the results to make a journal entry to record the use tax liability.


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    Ken Elliott
    Director, Financial Operations
    Billy Graham Evangelistic Association
    Charlotte NC
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    Academy - Online Interactive Learning from Experts


  • 7.  RE: Sale/Use Tax Purchase Invoice

    TOP CONTRIBUTOR
    Posted 23 days ago
    The system will calculate the use tax and set it up as a recoverable amount from your taxing authority.  Set the vendor as Tax Liable = Yes with the appropriate Tax Area Code.  Make sure that the Tax Details are set for the proper tax jurisdictions and Tax Group Code for the item/GL account using.  On the purchase document, ensure that the Tax Liable=Yes, the Tax Area is set, and the Tax Group is set properly on the purchase line.  There is a Use Tax field on the purchase line.  Make sure this is NO.

    When you post the transaction, it should debit the item/GL for $200.00 (assuming a $200 charge), a debit for $10.00 (assumig a 5% tax rate), and a credit for $210.00 (what you're paying your vendor.  The $10.00 will be posted in the account set up in the Tax Jurisdiction page for "Reverse Charge (Purchases)".  It will also be available when you run the Sales Tax Collected Report when you check the "Include Use Tax" box on the options page.

    Hope thisd helps.

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    David Wiser
    Sr. Solution Consultant
    Tigunia
    2019-2020 Board of Advisors
    BCUG|NAVUG All-Star
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    Academy - Online Interactive Learning from Experts


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