Invoicing > Optional Features

The Use Tax feature in Pak Accounting's Invoicing module is used to help track and report Use Tax. This is used if you don’t charge sales tax if selling the item, but you have to track sales tax if you (the customer) USE the item yourself

To Setup:

1. To turn on the Use Tax feature, go to Company Maintenance, Other Tab, change the Use Tax/Reimbursement to Yes.

2. You need to create a Class Code called *TAXAU (You must use this exact code as it is hard coded into the program to work with Use Tax). The only account/Sub-Account that will need to be filled in is the Cost of Goods Sold. All other account fields will be unavailable. (Hint: If you are able to define an account in any other field besides the COGS, you did not set up the Class Code properly.)

3. In Tax Rates, the taxing authority for each state will be used to determine if the customer is to reimburse the company for the use tax or if only the “costs” of the use tax is to be recorded by the system. If being reimbursed, the use tax part on the invoice will have a selling price that will print on the Invoice. On the tax authority you must put a check mark on all taxing authorities that are to be reimbursed for Use Tax. Leave your other rates unchecked.

4. In Parts Maintenance, for each state that Use Tax is to be accrued and/or charged for, a corresponding “USETAX-“ part must be set up. You must name the part as follows “USETAX-XX” (without quotes, XX being the 2 character state code), the Description being what will print on the invoice if the taxing authority is set up as “Reimburse”. The part must be set up as specified below:

•General Information Tab – Item type must be 2, class code must be the new *TAXAU class code, Allow cost to be changed NO, number of decimal places for Qty 2, UNCHECK Allow description to be overridden, print Qty on Invoice, & Print Sell Price on Invoice, Tax based on should be Non-Taxable. All other tabs should be left as they default.

•Once all USETAX-XX parts are created, each part subject to Use Tax should be found and marked as Use Tax States. To mark them as Use Tax there will be a new field on the Parts Maintenance, General Information tab, underneath the “Except for these States” that is called “Use Tax States”.

•Still in Parts Maintenance, Purchasing & Pricing tab, you must define a base cost for all parts subject to Use Tax. Use tax is based on costs, where normal sales tax is based on the selling price. The cost of that part is captured and retained when the invoice is entered. In order for this to happen, the base price must be defined. (Hint: You may have to change your Company Maintenance to Base cost, if you use another costing option be cautious as the Use Tax is computed based on cost, having a different costing option set will affect the Use Tax calculations.)

To Use:

Enter Invoices – Once the parts are set up as Use Tax parts for specific state(s), upon entering an invoice, if a part is subject to Use Tax (based on the first 2 characters of the taxing authority), it will automatically add a line item for the proper state Use Tax. If the tax authority is marked to reimburse, (the taxing authority defined on the invoice), using the Extended cost of the Use Tax parts as the Quantity, the tax rate as the Selling Price, it will compute the Use Tax reimbursement. If the tax authority is NOT marked as reimburse, the Use Tax part will still appear and have Costs (i.e. Use Tax), but with no selling price and extended price.

Updating Invoices – Upon updating invoices with Use Tax, instead of looking to the Class Code for the G/L Account/Sub-Account, the same coding used for the Sales Tax entry will be used.