Auto Listing of Sales Tax

[wms7328]

When the change was made to make the accumulation of reclaimable taxes more generic, one of the items we lost was apparently the entry of the tax item on the transaction. Previously when you listed a tax amount, the item was automatically entered as a line item in the transaction with the amount entered and the account number that you had set up. Now it still ask the question about the amount of reclaimable tax, but it doesn't create the line for the transaction. You have to manully enter that item again with the amount and account number. Don't know if that change was intentional but I would like to go back to where the program automatically enters this line for each transaction. Not a big item, just some duplicate entry for our Accounts Payable clerk.

[NeilZ]

When the change was made to make the accumulation of reclaimable taxes more generic, one of the items we lost was apparently the entry of the tax item on the transaction. Previously when you listed a tax amount, the item was automatically entered as a line item in the transaction with the amount entered and the account number that you had set up. Now it still ask the question about the amount of reclaimable tax, but it doesn't create the line for the transaction. You have to manully enter that item again with the amount and account number. Don't know if that change was intentional but I would like to go back to where the program automatically enters this line for each transaction. Not a big item, just some duplicate entry for our Accounts Payable clerk.

Which version is this ??

[wms7328]

Sorry, we are using Version 11 and it must have been changed in one of the recent maintenance releases. Accounts payable clerk just saw the change last week and I had just installed the last MR. There was not anything in the disucssion of the MR but something definitely changed.

[wms7328]

Another question I just found on this same topic. Now when the tax box opens up and you input the amount of reclaimable tax, it gives you the option to add a note. However, I can't find a report that prints out this note.

Our situation in NC is that we pay sales tax in various counties. When I file for refund, I have to list the tax by county, some counties have different tax rates. It would be nice to use the note option to list the county that purchase was made in and then I could sort those by saving to a spreadsheet. So, I need a report that prints out that note. Now, I have to print a list of all the taxes paid and then go through and add the county in a spreadsheet so I can sort taxes by county.

[NeilZ]

Another question I just found on this same topic. Now when the tax box opens up and you input the amount of reclaimable tax, it gives you the option to add a note. However, I can't find a report that prints out this note.

Our situation in NC is that we pay sales tax in various counties. When I file for refund, I have to list the tax by county, some counties have different tax rates. It would be nice to use the note option to list the county that purchase was made in and then I could sort those by saving to a spreadsheet. So, I need a report that prints out that note. Now, I have to print a list of all the taxes paid and then go through and add the county in a spreadsheet so I can sort taxes by county.

I think that change was in the June Maintenance Release, and it was changed for Canadian HST usage. I would verify the setup for your tax under Preferences -> Accounting -> Accounts Payable tab, then test to what happens. According to the Help File, the program is supposed to add a line to the distribution list.

If its not doing this, then there may be a bug.

[wms7328]

I have verified the setup in the preferences menu and it appears OK. I've set both of the tax items to record to an asset account number, to accumulate the tax charges, and it still does not add the line to the transaction. It will subtract the tax from the total it puts on an expense item, if the payee has a default expense item set up, but it does not list the line for reclaimable tax. If you do not have a default expense item set up for the payee, then it just shows the bank account set as a default and you have to enter again the tax total manually that you just entered in the drop down box previously.

Maybe the PC folks can take a look at this and hopefully get back to where it auto enters the line for reclaimable tax in the transaction list for that payee.

[wms7328]

OK, I finally got this to work again. In the table where you set up the reclaimable taxes, there are two lines labeled GST and HST. I had set the reclaimable amount to 100% but did not enter a tax rate since it varies from county to county. When I go back and put in a dummy tax rate, then when I enter the transaction in accounts payable, it asks for the tax amount and puts the line in the transaction list like before with the value I entered. Seems like the amount you enter for tax rate on that setup table is not used for anything in the U.S. but you have to put some rate in the table for it to add the line on the transaction list.

Now the only problem remaining is how to print a report with the note that you can add with the tax amount. I would like to use that to identify the NC county that tax is for and then I can sort that data in a spreadsheet when I file for the refund which has to be listed by county.

[Jeff]

The reclaimable amounts were changed due a change how Canadian customers can reclaim slaes taxes paid. I believe they can reclaim 50% of federal taxes and 85% of provincial taxes. To do the calculations correctly, we have to know the tax rates to figure out the amount of each type of tax.

You are right for US churches, the actual percentage doesn't matter, but it will need to be there. At the same time we made this change we also added the option to add text that will be added to the sales tax receivable account. For NC church the thought is you can run the account activity report, it will show the line note with which county the tax was paid in.

[wms7328]

Thanks for the into. In the account activity report, the note (I use this for NC county) is included in the description field at the end of the payee name. I want to use that note as a field to sort the results in a spreadsheet so I can get listing by county. Would it be possible to include the note you enter with the reclaimable tax amount as a separate field in the account activity report? That way I can easily sort that field and get my report by county. Thanks.

[KPegram]

I am also in NC with this by county issue. My question for you is, what line do you post your sales tax reclaimable. I have been incorrectly putting my in 09-1905-000 and it shows up as negative. According my earlier post below, I have been doing it wrong and I want to correct this. Do you CREDIT an income account and DEBIT the checking account?

Here's my original post.
viewtopic.php?f=3&t=7683

[JohnDMeyers]

Is it that you want to put a marker in your PowerChurch reports that money is due to you, before you actually receive it? Kind of like an Accounts Receivable amount?

If so, I would use a liability account, and an asset account, and here's why. You will be prematurely recording an asset that you haven't received. The liability balance will keep your unrestricted net assets accurate until the amount is received.
A1) You find out that you are due $20.00
DB 01-1110-001 asset (sub-account on checking) $20.00
CR 01-2920-000 liability $20.00

A2) You receive the tax amount of $20.00
DB 01-2920-000 liability $20.00
CR 01-4120-000 income $20.00

The net result is an increase in the asset account, and an increase in the income account. If you don't want to record the tax amount due, before you receive it, but only after you receive it, then there is only one transaction needed:
B1) Wait until the money is received before doing anything:
DB 01-1110-001 asset (sub-account on checking) $20.00
CR 01-4120-000 income $20.00


The use of the liability account only comes into play in-between the time you find out you are due the money, and the time you actually receive the money. If you notice, the combination of A1 and A2 yields exactly the same result as B1.

[KPegram]

Yes! I need to track the sales tax to be reclaimed by the state, so that I can request a refund from the state.

Thanks for your help!

[wms7328]

I do this a little differently. I've set up an asset account to accrue the sales tax as we pay it when we make purchases. As example, if we purchase something for $100, assuming 7% sales tax. The check would actually be written for $107. This is how I record that:

Asset (Checking Account) Credit $107.00
Asset (Sales Tax Accrual) Debit $7.00
Expense Account Debit $100.00

On the balance sheet, the sales tax accrual asset account shows the total sales tax that I've paid since the last refund was received. It's the money that has been sent to the state that will be refunded to you at a later date. Then when I receive the actual sales tax refund from the state I record:

Asset (Checking Account) Debit sales tax received
Asset (Sales Tax Accrual) Credit sales tax received

This way the sales tax received does not show up as income, it really isn't since it's money that you paid to the state, they held it for a while and then eventually sent it back to you. This way seems to work well for us. You do have to realize that the sales tax accrual asset account is money that you don't have in your checking account.

[KPegram]

THANKS! Does your sales tax accrual asset line show up as a negative amount on your balance sheet until you post the refund amount from the state? Thanks for all your help.

[wms7328]

No, my asset account always shows a positive amount. It may depend on when you start using this method. If you set up the asset account for sales tax accrual and one of the first things you post is a refund of sales tax from a previous time period, it could show as a negative amount. I would recommend you start at the beginning of a six month period, in NC you can file for a refund every six months, Jan-June, and July-Dec. Accumulate the sales tax paid in the sales tax accrual asset account for the six month period, all positive numbers since you are posting a debit to the sales tax accrual asset account, when you make a purchase and pay sales tax, it will increase it's value. Then when you receive the refund for this tax period, most likely in August depending on when you filed for the refund, you would post the refund as a credit to the sales tax asset account which would decrease the sales tax accrual asset account by the amount of the sales tax refund.

I look at this sales tax accrual asset account as the amount of church money the state currently has and will be actually refunded after I file the refund request.

Hope this helps.