If sales tax is not on the invoice the A/P clerk will need to refer to a state-specific tax matrix provided by your accounting or tax department. This tax matrix categorizes purchases (services and property) into taxable or exempt transactions. REMEMBER you need a tax matrix for each state or one that covers multiple states as the rules can vary drastically.
Step 3 – Aggregate Any Taxable Transactions
If your accounting software offers a field to add the use tax or a check-the-box feature, that is preferred. If you have no way to capture the use tax into your accounting software, you can scan the images into a folder by month. This information will be used by the group responsible for reporting sales & use tax. Many companies will utilize a use tax stamp for each invoice, which is helpful during a tax audit. Other companies will have A/P record each transaction on a spreadsheet and then forward the data at the end of each period to the responsible party. You have to create an audit trail from the point of the decision-maker to the person ultimately responsible for filing sales & use tax returns.
Step 4 – Complete Your Returns
The final step is for the monthly or quarterly sales & use tax returns to be completed (usually online) and then a file stored with copies of the documents used to support the returns. If you have any questions, please contact any of our service leaders for additional assistance.