Setting Up Supplier Tax Information
Paying VAT and Sales tax for suppliers
You select default sales type taxes for suppliers in the Invoice Tax Name Field in the Invoice Tax region of the Supplier Sites window. These values will be used as tax defaults if you include Supplier or Supplier Site in your Tax Name Defaults hierarchy. See: Defaulting Tax in Payables.
If you enter a supplier that is in the European Union (EU), you must first specify its country as an EU member state. See: Countries and Territories. When you enter an EU supplier that is registered to pay Value-Added Tax (VAT) charges, enter the VAT registration number as the Tax Registration Number for the supplier.
Entering intra-EU suppliers and recording VAT for reporting purposes
If you enter a supplier that is in the European Union (EU), you must first specify its country as an EU member state. See: Countries and Territories. When you enter an EU supplier that is registered to pay Value-Added Tax (VAT) charges, enter the VAT registration number as the Tax Registration Number for the supplier. When you are doing business in the EU with an EU supplier, you will record VAT taxes for reporting purposes; however, you will not pay them to the supplier. To accomplish this, enter the VAT tax in the Invoice Tax Name field and enter a corresponding Offset tax in the Offset Tax Name field. When you enter an invoice for a supplier site with a VAT Invoice Tax Name and an Offset Tax Name, Payables eliminates your VAT tax liability while maintaining a record of all VAT taxes you need to report. For more information see: EU VAT Taxes.
Suppliers subject to income tax reporting requirements
Define a supplier as federally reportable by enabling the Federal option and recording a default Income Tax Type (1099 MISC Type) in the Suppliers window. Payables assigns the income tax type to each invoice you enter for that supplier. See also: Entering Invoices for Suppliers Subject to Income Tax Reporting Requirements.
If you participate in the United States Internal Revenue Service (IRS) Combined Filing Program, you can also define a supplier as State reportable. When you do this, you must select a site to be the Income Tax Reporting Site. Payables uses the State Reportable status of a supplier for reporting purposes only. You can create custom reports to satisfy a tax authority's reporting requirements.
If the tax reporting name is different from the supplier name, enter it in Reporting Name field in the Tax Reporting Region. Payables uses the Reporting Name to produce documents for the IRS. If you use magnetic media, select an Organization Type in the Tax Reporting region. For more information, see the Tax Reporting Region of the Suppliers and Supplier Sites Windows.
You can use the Tax Information Verification Letter to request that your suppliers provide or verify their tax information. See: Tax Information Verification Letter.
Withholding taxes for suppliers
Enter withholding tax information for a supplier in the Withholding Tax region of the Suppliers and the Supplier Sites windows. Check Allow Withholding if you want to enable withholding for a supplier or supplier site, and select a default Withholding Tax Group that Payables will default to all invoices you enter for the supplier site. For more information, see: Automatic Withholding Tax Overview.
Taxpayer ID and Tax Registration ID Validation
Payables provides country specific validation of the Taxpayer ID, also known as the NIF, to alert you to data entry errors for the following countries: Italy and Spain. Payables also validates the Tax Registration Number, also knows as the VAT registration number, for Austria, Italy, The Netherlands, and Spain. See: Taxpayer ID Validation and Tax Registration Number Validation.
See Also
Updating a Supplier's Tax Status
