EQD: Use Tax

What is Use Tax? It is a tax imposed by a state to compensate for the sales tax lost when an item is purchased outside of the state, but is used within the state. For example, your company buys product, not for resale, from a state that has no sales tax or does not charge you sales tax because it is an “out of state” shipment, but your company is in a state that does have sales tax. Your state taxing authority expects to collect Use Tax from your company for the sales tax it would have collected had you bought the product within your state.

In e-Quantum, Use Tax is defined in Accounts Receivable Sales Tax Setup and then accumulated through Accounts Payable’s Invoice Editing. When the Sales Tax Report is printed Use Tax amounts print at the end of the report giving you the figures you need to report for both Sales Tax and Use Tax. For clients that have multiple offices that fall under different tax rates the Use Tax can be separated and reported by Division. In addition, e-Quantum provides you with the ability to assign a default Use Tax to one or all of your divisions which streamlines data entry and alleviates any possible data entry errors.

Accounts Receivable: Sales Tax Setup

Before e-Quantum can start accumulating your use tax, the percentage has to be added to the sales tax code, for your location. To edit the sales tax code go to A/R>A/R File Maintenance>Sales Tax>Sales Tax Setup.

• Locate and highlight the Sales Tax code for your location.
• Click Edit.

• Enter the use tax percentage in the “Use Tax” Rate (%) field.
• Click Save.

Preferences: System Options

Whether you have one office or multiple offices e-Quantum provides you with the ability to set a default Use Tax code. To set the default(s) go to File>Preferences>System Preferences>System Options.

• The Division drop down field defaults based on Division code set in Company Maintenance. If you have more that one office select each one separately.
• Enter the applicable Use Tax code in the Tax ID field.
• After defining ALL tax IDs click Save.

Accounts Payable: A/P Invoice Editing

e-Quantum accumulates your use tax as you enter vendor invoices in A/P Invoice Editing. To

enter a vendor invoice go to A/P>A/P Invoice Editing. Enter the Vendor, click Add.

• Enter the invoice in the normal manner.
• Click $ “Use” Tax Reminder.

The examples, shown above, are for clients that have multiple offices. If you only have one

office you will not need to split the Use Tax.

• Select the office from the Company/Div drop down field. This information defaults based on the division code set in Company Maintenance.
• Enter the applicable “Use” Tax ID. If you set a default, in Preferences, this information just needs to be verified.
• The Taxable Amt field defaults to the Invoice Total and can be changed if needed.
• The system calculates the Use Tax based on the Taxable Amt and the Use Tax percentage in the Sales Tax Setup. It can be changed if needed.

• The system calculates the Total by adding the divisions. If you have only one division

  this total is the same as the Use Tax amount.

• Enter any Remarks you may have. This information prints on the Sales Tax Report for

  reference.

• The Date field defaults to the current date and can be changed if needed. This is

  informational only and does not determine when the Use Tax needs to be paid.

• e-Quantum displays the initials of the user that entered and/or changed this information.
• Click Okay.

Accounts Receivable: Sales Tax Report

For ease of reporting your Sales Tax and Use Tax you will find a “Use Tax” section at the end of the Sales Tax Report. To print this report go to A/R>A/R Reports>Tax Reports>Sales Tax Report.

• Print the Sales Tax report as you normally would and post it. Use Tax, like Sales Tax, that has been posted to a report will not print on subsequent reports.