Charging use tax on payable invoices

Use taxes are taxes that some states levy when you purchase items or services on which no tax was collected by the seller—for example, a tax on out-of-state purchases, or when there is a differential on the sales tax rate you paid and the sales tax rate that is charged in the state.

In the 1-8 General Ledger Setup window, you select the Post ‘use tax’ expense to option if you want to post use tax expenses to particular accounts that you specify in that window. When you enter a payable invoice to which use taxes apply, you specify the ‘Use Tax’ District (like the Tax District on receivable invoices), which Sage 100 Contractor uses to calculate and display the total use tax you owe. The posted ledger transaction includes the detail for the use tax.

If you do not select the Post ‘use tax’ expense to option, use tax expenses are posted to the ledger accounts used in the invoice, unless they are inventory accounts. You specify an overhead expense account to which to post inventory-related use tax expenses in the 4-2 Payable Invoices/Credits window.

To record use tax on an invoice:

1. Open 4-2 Payable Invoices/Credits.
2. Create the payable invoice.

3. In the 'Use Tax' District box, select the tax district to which you owe the use tax.

   Sage 100 Contractor calculates the use tax amount for the district you enter as the default, but you can change the amount.

4. If you do not use the Post 'use tax' expense to option, check that an overhead expense account is specified for any inventory-related use taxes, as follows:
   1. Click Options > Set Use Tax Expense Account for Inventory.
   2. In the Use Tax Expense Account for Inventory window, specify an overhead expense account and, if needed, the subaccount.
5. Click File > Save.