Sales tax USA configuration in Microsoft Dynamics 365 Finance and Operations

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Rahul Mohta

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Sales tax USA configuration in Microsoft Dynamics 365 Finance and Operations

key setup includes

Sales tax : responsibility of seller to collect and pay taxes to authorities
Sales Tax is defined as a tax on the sale, transfer, or exchange of a taxable item or service.
Sales tax generally applies on the sale to the end user or ultimate consumer. Sales tax is generally added to the sales price and is charged to the purchaser.

Use tax: responsibility of buyer to pay taxes to authorities (these are not collected by seller)
Use tax becomes due after a taxable purchase is made, when sales tax was not paid or was underpaid. The purchaser of the goods or services is responsible for paying use tax.

Both are applicable in sales tax regimes. (i.e. (US) sales tax taxation rule enabled)
Sales tax would post sales tax receivable transactions on AP side (Vendor invoice,,,)
however they are never used in any net off calculation. i.e. no input credit only output tax.
All the sales tax payable from various sales invoices are to be paid to the authorities.

In countries where VAT is used input credit on tax paid to vendors could be used to net off net tax payable.
For VAT i.e. using input tax one needs to turn off (US) sales tax taxation rules.