U.S. Consumer's Use Tax

You can calculate the consumer's use tax on purchase transactions automatically. This is beneficial especially when sales tax (or seller's use tax) was not charged for various reasons and the sale is not subject to exemption.

This functionality can be enabled by checking the Calculate Use Tax Automatically box. The box is displayed on all taxable purchase transactions with a US nexus. Your selected US nexus must have the SuiteTax Engine assigned to the transaction subsidiary per transaction date. Every role with an Edit or Create permission for purchase transactions can check this box.

If you want to calculate the consumer's use tax automatically, check the Calculate Use Tax Automatically box on the respective purchase transaction. You can find the box under the Tax Details subtab.

The use tax types and use tax codes are provisioned automatically. The use tax codes are self-assessed and non-claimable, which is in consistence with the US consumer's use tax behavior. The tax types have the Post to Item Cost and Reverse Charge properties checked. For more information about these properties, see Creating Tax Types in SuiteTax.

US use tax is calculated based on the Ship To address filled in the Location field. For more information, see United States Tax Code Lookup for Purchases.

Manual Use Tax Calculation

You can either use the automatically provisioned use tax types and use tax codes, or you can create them manually. To create them manually, check the following instructions.

Creating a Tax Type for Use Tax

Create a tax type form as you would create a regular tax type, with some additional information.

To create a tax type for use tax:

1. Go to Setup > Tax > Tax Types > New. For more information, see Creating Tax Types in SuiteTax.

2. Select United States in the Country list.

3. In the Name field, enter Use Tax.

4. In the Description field, enter U.S. Use Tax.

5. Check the Post to Item Cost and the Reverse Charge boxes to set these properties for your use tax type.

6. In the Nexus column, select all applicable U.S. nexuses.

7. In the Receivables Account column, assign the appropriate use tax account for each nexus.

8. Click Save.

Creating a Tax Code for Use Tax

Create a tax code form as you would create a regular tax code, with some additional information.

To create a tax code for use tax:

1. Go to Setup > Tax > Tax Codes > New. For more information, see Creating Tax Codes in SuiteTax.

2. In the Name field, enter Use Tax.

3. In the Tax Type list, select the Use Tax tax type created earlier.

4. In the Available On list, select Purchase Transactions.

5. In the Tax Rate Type list, select Standard.

6. In the Tax Rate field, enter an appropriate tax rate.

7. Click Save.

Assigning Use Taxes to Purchase Transactions

If a use tax applies to your purchase transaction, you can assign the tax to your transaction.

To assign use taxes to a purchase transaction:

1. To create a purchase transaction (for example, a vendor bill), go to Transactions > Payables > Enter Bills. For more information about purchase transactions types, see Sales and Purchase Transaction Types Overview.

2. You can allow the engine to determine the nexus. Otherwise, you can check the Nexus Override box and select the appropriate nexus.

3. Check the Tax Details Override box.

   Note:

   The override is required, because the engine does not have any tax determination logic for U.S. Purchases.

4. In the Vendor Tax Reg. Number field, select the appropriate number.

5. Set the Tax Point Date, if it is different from the Transaction Date. To set the Tax Point Date manually, check the Override box.

6. On the Taxes subtab, set the following tax details:

   1. In the Tax Details Reference column, select the line item to which the purchase tax applies.

   2. In the Tax Type column, select the tax type created earlier for the U.S. use tax.

   3. In the Tax Code column, select the tax code created earlier for the U.S. use tax.

   4. In the Tax Basis column, enter the amount from which the tax is calculated.

   5. In the Tax Rate column, enter the applicable tax rate. The value should be a percentage, for example 10.

   6. In the Tax Amount column, enter the calculated tax amount. Calculate this amount by multiplying the tax basis amount by the tax rate amount.

   7. Click Add.

   8. Repeat the steps for each line item, as necessary.

7. Click Save.

General Notices