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Dynamics 365 Community / Forums / Microsoft Dynamics NAV (Archived) / Use Tax
Microsoft Dynamics NAV (Archived)

Use Tax

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Posted on by Amanda Hansen 210

I am trying to set up my accounts payable so that I can calculate use tax on invoices where the vendor does not charge sales tax.  I have my tax jurisdictions set up but I'm obviously missing something.  When I enter a $100 invoice that needs use tax accrued, I want the posting to the g/l to look like this:

 $100 A/P (because I don't owe the vendor that tax)

$105.60 Expense account

$5.60 Accrual account

 Can someone help me?

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  • Chellelyn Profile Picture
    Chellelyn 45 on at

    Amanda, did you ever find a resolution for this?  After going through a sales tax audit, it was determined that we need to self-access use take on some items we purchase because the vendor does not charge sales tax.  

  • Amanda Hansen Profile Picture
    Amanda Hansen 210 on at

    Chellelyn, you can assess use tax on items in NAV, my problem was more about the way it shows up.  What version of NAV are you on?

  • Chellelyn Profile Picture
    Chellelyn 45 on at

    We are on NAV 5.1.  Your example above is exactly what we are wanting to do.  We purchase items from the vendor but since they are not set up to collect sales tax in our state, we are required to self access and pay the state.  We don't want to pay the vendor this amount.

  • Community Member Profile Picture
    Community Member on at

    Create the purchase invoice as usual and fill in the necessary amounts from the vendor’s invoice.

    On the invoicing tab of the header, make sure the Tax Liable field is checked and the appropriate code is entered in the Tax Area Code field.

    On the lines of the invoice, use the View, Show Column feature to add the Use Tax check box.  Place a checkmark in this box.

    Post the invoice.

    The result of this posted invoice is to properly credit Accounts Payable with the invoice amount (not including tax as you do not owe the vendor for this tax) and credit a Use Tax Payable account (set up under Sales Tax, Tax Jurisdictions, Reverse Charge – Purchases) for the use tax calculated amounts.  The debit entry is to the expense account on the purchase line for the total amount.

    The Tax Account (Sales) identifies the Sales Tax Payable account to use when sales transactions with sales tax are posted. The Tax Account (Purchases) identifies the Sales Tax Expense account to use when a purchase transaction is directed to add sales tax to a purchase invoice and send the sales tax to the vendor without including it on the purchase line.  (The Use Tax field is not selected in this scenario.)

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