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Hi All,
In the PO, I need to roll the sales tax into the purchase cost (debit inventory or debit purchase expense), on the credit side, I need it to hit AP. Just AP only, no Sales Tax Payable. If it hits the Sales Tax Payable account, it would be fine, too, but it needs to back out of the same account. Meaning, sales tax payable in & out = zero. When I run the tax report at the end of the month or quarterly or whenever needed, I'm able to generate the sales tax payable report. Is there such an option or workaround? Thanks so much for your feedback.
To roll the sales tax into purchase cost, I have the charge code as seen below.
Good morning Kim,
Is the sales tax payable that you would like to debit for $70 something that you have to pay for example to your tax office?
If this is the case then your credit account would be a cash/payment account.
In case this is only recorded for accounting / tax reasons then you will probably need a BS account.
In Europe we use something similar where we debit and credit tax accounts for purchases from Europe.
We usually realize this by enabling the 'use tax' parameter in the sales tax groups.
Yet, I am not deep enough into the US sales tax system to give you a clear advice.
Probably do some testing with this use tax parameter in the standard MS contoso environments.
If this does not help, try to get some help from a local AX/US-sales tax expert.
Best regards,
Ludwig
Thank you, Ludwig, for your response. It is US sales tax which consists of city and county taxes. You are right, based on this screenshot, it doesn't hit the sales tax account.
I had configured the tax module, attach the sales tax code to the vendor record, I'm able to let it hit the sales tax account. My transaction looks like this:
Now, I'm thinking out loud or brainstorming. If I were to back out the sales tax payable, I would debit the Sales Tax Payable and credit what? Suspend account? I wonder if it may rise audit concerns.
Hello Kim,
If you use the charge code that you shared above then your debits and credits will be ok but the transaction will not make it into your sales tax report unless you post a manual corrective entry e.g. in a GL account on a sales tax code /account.
I am wondering what kind of sales tax you are dealing with and for which country this sales tax applies?
Best regards,
Ludwig
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