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How to Accrue Correct Sales and Use Taxes for Pro-card Transactions
Summary: Follow the steps on this page to ensure that sales and use taxes are correctly calculated and paid.
When goods are purchased from an out-of-state vendor who does not have a business presence in California, or from another county, the responsibility to pay the state sales tax, or the county (district) tax shifts to the purchaser.
The accrual of sales tax is required only when the amount of sales tax shown on the receipt is less than the correct amount, based on where the item will be used. If the receipt reflects a higher tax rate, no adjustment is required.
See also Sales and Use Tax Overview.
| What FAST-AP does: |
How they do it: |
| 1 |
Review each pro-card transaction receipt to determine if the correct tax amount has been paid. |
- For each pro-card transaction ask the following questions:
- Was sales tax charged? (Check the receipt.)
- If yes, what percent sales tax was paid?
- Where will the goods be used or consumed?
- Was the correct percentage paid?
See the Financial Affairs: Sales and Use Tax Overview to determine correct sales tax amounts.
- If enough sales tax amount has not been paid, continue with Step 2 to accrue the difference between the amount due and the amount paid to the vendor.
- If enough sales tax has been paid, this process is complete.
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| 2 |
Calculate sales/use taxes due to the State. |
- Compute the tax due: [(Total Cost of Goods x County rate) - Tax Amount Paid].
- Indicate the transactions on the statement for which taxes are being calculated and accrued.
- Sum the taxes due for all purchases listed on the statement.
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| 3 |
Prepare a tax journal voucher (JV) to accrue sales/use taxes calculated in Step 2, part 3.
Pay any outstanding taxes at least monthly. |
- See FIS Banner: Creating a Journal Voucher (FZAJVCD). Use rule code XTAX.
- Debit the FOAPAL associated with the pro-card. Use the amount calculated in Step 2c above. (Use one journal entry line for the total taxes due for all purchases listed on the pro-card statement.)
- Credit the sales tax payable account:
- Use Index Code 115510 for goods delivered to and consumed in Santa Cruz County;
- Use Index Code 115511 for goods delivered to and consumed in Santa Clara County;
- Use Index Code 115513 for goods delivered to and consumed in Monterey County;
- Provide the following information in the Description field for the JV: PCTax/Statement Date/Cardholder's last name
[example: PCTax/6-15-98/Rhoads]
- Populate the Document Reference field with PCTAX.
- In the Text field, add any additional info that helps you identify the purchase for which the tax was accrued.
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| 4 |
Review and approve pro-card tax journals. |
XTAX journal vouchers for pro-card transactions follow the same approval routing procedures established for direct payment tax journals. |
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Last revised: April 23, 2009 (am)
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