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Sales tax is a government imposed percentage tax on the selling of certain property or services. Sales tax will make part of the government's revenue. This means the taxing entity is budgeting for this expected income of cash & they expect your business to supply it. Thus the need of the business to track, collect, & report on sales tax.
AGRIS software has the capability of meeting these tracking & reporting needs. It's all in how the software is setup.
We will review some options for sales tax setup that show the simplicity & the complexity we can go to to accomplish the reporting needs you have. At the end of this class you should be armed with the knowledge you need to understand what and/or where the data you are currently collecting is within AGRIS & how to make the changes necessary to improve your functionality.
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Tax information is connected to:
Invoice Line Items
Invoices
Payments
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Note that the information that is driven to the ledger shows sales tax by the whole invoice, not by line items.
Note that the information is driven by the payment record. We do not know what line items were on the original invoice to tell us how to code tax. Only the invoice itself.
This means that when balancing the subsidiary to the ledger sales tax liability accounts, the accurate reports will come from AR Invoice reports & AR Payment reports.
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Used to default the appropriate tax rate & amounts that will be saved as the overall tax on the invoice.
The invoice line items will save the tax rate & tax amount that was calculated on each item.
Nothing regarding tax on individual line items will drive to the ledger.
The line item information can have reports run on it.
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User-Defined Inventory Activity Report - Sales Tax Report – By Product Category – Rates
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The invoice document carries the sales taxes that are calculated at time of invoice creation from the line items.
The Ledger is updated from the Accounts Receivable Invoice.
The customer will pay the tax amounts that are part of the overall invoice amount.
The invoice hold for sales tax buckets.
ACR – Setup Information – General Information – Screen 2 of 4
Each of these buckets represents a unique SJI transaction code so that you can drive each field to a different ledger account.
These four sales tax fields are linked to four tax fields on the name/address record & the inventory item record.
Name/Address Accounting Information Screen
These Y/N flags will keep/remove the tax keyed on line items at time of invoicing when you get to the Invoice Summary Screen.
Inventory Item Pricing Information Screen 
These codes on the item allow the sales tax field to open up on the invoice during line item entry. If you cannot see these fields on the item at invoicing, then the item itself does not have a table for itself in the Item Maintenance.
You run detailed tax reports form the AR Invoice Reports option.
AR Invoice Report – Monthly Sales Tax Summary 
SJI Exec ID – Transaction Analysis Report 
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The Payment document carries the sales taxes discounts, if you offer them, that are taken at time of payment of invoice.
If Sales Tax Discounts are turned on, then your invoice terms discount amount will include the discount on items plus sales tax. Warning: Some states require an amended tax return on sales tax discounts. Please check your state's requirements prior to offering sales tax discounts. The extra paperwork may not be worth offering this to your customers.
ACR – Setup Information – General Information – Screen 2 of 4
Invoice Line Item Entry showing Discount & Tax Entry 
Invoice Summary Showing Sales Tax Calculation & Discount Affect 
Notice that the discount includes the Sales Tax as part of its calculation.
User-Defined AR Payment Report showing Discount Given on Sales Tax 
Please note that you do not have the option to sort by state/county code in an AR Payment report although you can print it. Best option would be to take this to a spreadsheet format & sort by state/county for subtotaling purposes.
SJI Exec ID Report – Transaction Analysis Report for Payment Giving Sales Tax Discount 
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The reports that show you sales tax calculations or sales tax collected are found through out AGRIS:
Inventory Activity Reports (Standard) –
Sales Tax Report – by Product
Sales Tax Report – by Product Description
The standard reports will show the tax amount on each item that was taxed.
Does not have to balance to the invoice record.
WARNING: this means the line item detail from an Inventory Activity Report will not always match the ledger or the AR Invoice Report. It is showing the defaults used but there are situations where these fields don't always update. Imported invoices from other systems often do not have the line item detail to backup the invoice sales tax amount.
Accounts Receivable Invoice Reports (Standard) –
Monthly Sales Tax Report (Detail)
Monthly Sales Tax Report (Voided Invoices)
Monthly Sales Tax Summary
These reports are the ones that actual drive dollars to your Sales Tax Payable account.
WARNING: They will not always match inventory activity reports. Consider the AR Invoice report to be correct.
Accounts Receivable Payment Reports (User-Defined) –
You have the ability to design your own sales tax discount given report in AGRIS. Currently we do not have any standard reports for tracking this function.
System Journal Interface – Execution ID Reports (User-Defined) –
You have the ability to design your own sales tax reports based on the SJI transaction codes.
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Inventory Line for Tax Amount
Using the Sales Tax Fields 1-4
Using the Sales Tax Fields 1-4 with State/County for Tracking Taxing District/Rates
Tax to report on sales to taxable/non-taxable customers; to prove when sales tax was overridden.
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This is the most simplistic of the taxing scenarios. You setup an inventory item that represents the sales tax on the invoice. The AGRIS user keys in the sales tax total with the line items.
Setup:
Setup Product Category that will drive any inventory in that Product Category to the appropriate Sales Tax Liability in the ledger.Inventory – Setup Information – General Information – Setup Product Category
Setup SJI Transaction Codes for the new Product Category SJI – System Code – Accounts Receivable Source Code of new Product Category Transaction Code of SL for Sales Account code – Accounts Payable Sales Tax Source Code
Setup inventory item to represent the sales tax.Inventory – Inventory – Item Maintenance – Add New Item This will be a service item.The default prices will be the sales tax percent in decimal form.For example: 5.5% tax become 5.5-cents or $.055.
Process:
User starts invoice, keying in all the inventory items.
The last line item keyed is for the sales tax.Select the sales tax item number.
Key in the taxable amount in the quantity field.
Key in the sales tax percentage in decimal format in the price or have it default from the item number.For example: 5.5% tax become 5.5-cents or $.055.
Extended amount is the sales tax being charged.
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Reporting:
Tax Collected:Inventory Activity Report for this Item Number will give totals by invoice number of the tax collected.
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Taxable Sales: This would be a hand calculation that you back into.Sales Tax collected divided by sales tax rate = Taxable Sales Looking at the example above, the extended amount will be $.58 once the screen is OK'd:$.58 divided by $.055 = $10.55 Taxable Sales
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The invoice has four sales tax buckets that can be driven to unique ledger accounts. This process means you are given a unique purpose to these four fields for collecting a sales tax.
| Example #1 | Example #2 | Example #3 | Example #4 |
Sales Tax #1 | State Tax | KS Tax | Sales Tax | Loc 100 |
Sales Tax #2 | County Tax | OK Tax | Not Used | Loc 200 |
Sales Tax #3 | City Tax | AR Tax | Not Used | Loc 300 |
Sales Tax #4 | Tonnage Tax | MO Tax | Not Used | Loc 400 |
Setup:
Define the Sales Tax Fields.ACR – Setup Information – Screen 2 of 4
Setup Tax Table Codes.INV – Setup Information – Invoicing Setup – Add/Edit Sales Tax There will be one table per each Sales Tax Description
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Setup the SJI Transaction Codes for tracking the buckets.SJI – System Accounts – Accounts Receivable Transaction Codes S1 – S2 – S3 – S4Transaction Codes D1 – D2 – D3 – D4 for Tax Discounts
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Process:
User starts invoice, keying in all the inventory items.
As you key the items, note that the sales tax% fields are visible with a rate in them.You may or may not have access to these fields depending on your System Security.The amounts below will total to $.12 tax.
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If any amounts are changed on <Tax/Discount> screen, then the dollars will be allocated back to the items that were marked with tax rates.Taxes will not be allocated back if the inventory item had no table assigned.
Reporting:
Tax Collected: Accounts Receivable Invoice Report will show each sales tax bucket amount collected.
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Taxable Sales: Inventory Activity Report will allow you to run, by product category/inventory item number, each line item that was taxed.
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The invoice has four sales tax buckets that can be driven to unique ledger accounts. These codes can be further broken down by source code (aka state/county.) This process means you are given a unique purpose to these four fields for collecting a sales tax that can be stretched further than just 4-codes.
By adding the State/County code, we add another layer of complexity.
Ability to default tax rate based on where the product is purchased/delivered.
Ability to run reports by State/County. So if you are preparing taxing reports for multiple states, then you have the ability to run reports by state.
Setup:
Define each of your taxing districts where there is a different rate.
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Setup the SJI Transaction Codes for tracking the buckets.SJI – System Accounts – Accounts Receivable Transaction Codes S1 Transaction Codes D1 for Tax Discounts using the state/county code as a source code.
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Process:
User starts invoice.
User receives BEEP because invoice requires the Pickup/Delivery flag be selected.Pickup – pull location code state/county code Delivery – leaves state/county blank, user must select state/county that product was delivered.
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If any amounts are changed on <Tax/Discount> screen, then the dollars will be allocated back to the items that were marked with tax rates.Taxes will not be allocated back if the inventory item had no table assigned.
Reporting:
Tax Collected: Accounts Receivable Invoice Report will show each sales tax bucket amount collected.Report will Sort by State code with the County code detail.You will be able to report to the state revenue department which taxing district the money was collected for.
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Taxable Sales: Inventory Activity Report will allow you to run, by product category/inventory item number, each line item that was taxed.
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Building on the previous examples, we now take the sales tax tracking to its final step – being able to know if a taxable customer had the tax removed or if a non-taxable customer received tax.
The invoice has four sales tax buckets that can be driven to unique ledger accounts. We will use these buckets, combined with the state/county codes, to classify customers & inventory as to what happens in two circumstances.
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Item will be flagged
Sales Tax #1 – Taxable Customer – 15 Sales Tax #2 – Non-Taxable Customer – 25
If any taxes are removed, you'll be notified by the rate in that sales tax bucket.
You can use the state/county codes to give further trackability to the sales tax by defining tables 10-15-20-25 with state/county codes.
Setup:
ACR-SETUP INFORMATION-SCREEN 2 OF 4
Sales Tax 2 = Non-Producer Tax = 10 – taxable rate
Sales Tax 2 = Non-Producer Tax = 15 – no-tax
Sales Tax 3 = Producer Tax = 20 – taxable rate
Sales Tax 3 = Producer Tax = 25 – no-tax
INV-SETUP INFORMATION-INVOICING SETUP-ADD/EDIT TAX TABLES
Tables Ends in zero – positive tax rate
Tables Ends in five – zero tax
3-TYPES OF CUSTOMERS FOR TAX FLAGS
Producers – N-N-Y-Y = Name ID C
Non-producers – Y-Y-N-N = Name ID D
Governmental/Churches – N-N-N-N = Name ID E
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Setup the SJI Transaction Codes for tracking the buckets.See examples before.
Reporting:
Tax Collected: Accounts Receivable Invoice Report will show each sales tax bucket amount collected.Add another sort level for name id type for customer type.
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Proof that all taxable customer paid tax.Run by name id type range & date.Show all sales regardless of tax calculated.Additional Options – Taxable Sales – flag for everything.
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