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US Sales Tax Reconciliation

Receivables provides the US Sales Tax Report to assist you in preparing State Sales Tax Returns and in reconciling these returns to your general ledger.

Within the US, most states, as well as some local governments, collect a sales or use tax for items sold within the state. To ensure collection of sales taxes, each state requires periodic Sales Tax Returns detailing the gross, taxable, exempt and tax amounts for each state, county and city. These returns must be supported by reports which include all transactions for which sales tax should have been charged.

Suggestion: Not all businesses are required to collect and remit state sales and use taxes. You should seek the advice of a qualified tax professional to determine if your business has a legal requirement to collect these taxes.

Additionally, good accounting technique requires the sales tax liability owed to each state be uniquely identifiable within the general ledger. The activity of each of these sales tax liability accounts must equal the amount of sales tax owed to each respective state. To accommodate each state's sales tax reporting requirements, you should be able to:

Before Reconciling US Sales Tax

Before attempting to use the US Sales Tax Report to prepare your Sales Tax Returns, you must perform the following:

Receivables calculates sales tax on invoices, debit memos, credit memos and adjustments. Sales tax is not calculated on guarantees, deposits, finance charges or cash receipts. To calculate sales tax on freight, you must set up the freight inventory item.

Note: Because Receivables does not calculate sales tax on cash receipts, you cannot use the US Sales Tax Report for tax reporting on cash basis systems.

See Also

Implementing US Sales Tax

Overview of Tax Reconciliation

Tax Reports


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