Tracking what items are taxable and not taxable can be a real challenge. Each state has its own laws as to what items are taxable. Products, services and miscellaneous charges all have to be considered for taxability. Whether the customer is picking up or if you are shipping product also affects the tax jurisdiction to be used to calculate sales tax. There are also timing issues as to the date of delivery/possession for determination of which tax rate to charge (for when tax rates change.)
The whole process can be daunting. The complexity is true for both the invoicing of customers as well as items purchased from vendors. This article will focus on the EXEControl use tax tracking (i.e.; the purchasing of items from vendors).
EXEControl® Global Solutions has made additional enhancements to EXEControl’s use tax tracking so you can better manage tax obligations and credits. Here are some of the changes made to assist in this task:
- Management by vendor: EXEControl has been enhanced to allow you to flag which vendors might create a taxable event for your company. For each vendor you can decide if use tax information needs to be prompted. For example, a vendor that provides solely non-taxable inventory deliveries, never an exception, you can flag that vendor to not prompt use tax questions. Another vendor might be one where you purchase product for both your manufacturing process and your general administration operations. The product you purchase of your manufacturing process might be tax exempt but the products you purchase for your general administration operations may be taxable. For these types of vendors you can flag them to prompt use tax information and require entry along with an explanation as to why the invoice is and/or is not taxable.
- Tracking on vendor invoices: Every vendor invoice now has the ability to capture use tax information (tax paid, tax owed and details/reason for determination.) The system then tracks invoices where no tax was paid, however, the company owes the tax as well as situations where you paid sales tax but you were exempt from tax so you can claim your credits. The system allows the user to establish the use tax amount due so that if only select lines have a tax implication, the tax amount can reflect just those items. The use tax explanation field allows you to provide the supporting description of determination.
- Tracking on inventory adjustments: Some companies use internally the product(s) they also sell. For example, an office supply store might sell copier paper and also use the copier paper for internal purposes. This office supply store might receive all paper tax exempt (for resell) but on occasion remove paper from inventory for internal use. When this paper is used internally, most likely a taxable event just occurred. EXEControl’s inventory adjustment system has been enhanced to track if the adjustment constitutes a taxable event and an explanation field to give reason of determination. Like the vendor invoice tracking, flags can be placed on the inventory adjustment type codes so you can ignore use tax fields for physical and cycle counting but prompt them for ‘used internally’ code(s).
- Simplified consolidated reporting: All transactions from vendor invoices, inventory adjustments and customer invoices are now combined into a single reporting center for simplified reporting. This new reporting center allows for the marking of which transactions have been included within the said reporting period so that should you receive an invoice from your vendor after the reporting date you can still see that you have a previous quarter taxable event that needs to be reported. All transactions are flagged as to which reporting date was used to settle the tax obligation and/or credit so if a tax audit is ever performed, you can retrieve every transaction associated with every tax reporting date matching totals exactly.
EXEControl Global Solutions is not an accounting firm and we do not provide professional tax advice. We will work with your tax advisor to ensure that EXEControl’s use tax tracking is configured to maximize your ability to track, report and manage your tax obligations and credits. To learn more on how EXEControl can help you track your taxable obligations, please email firstname.lastname@example.org or call 800-393-2875.