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Sales tax is based on the retail price of an item and it can be applied to quotes, orders, and job bills. When an item is invoiced, the sales tax will appear on the invoice, and on the Sales Tax Due Report.
Sales tax cannot be applied to job materials since materials in job do not have a retail price.
As a seller, it is important to know whether you are located in an origin-based state or a destination-based state when it comes to charging Sales Tax.
- - Origin based states normally charge taxes based on where the seller (you) are located, such as the tax rate where your retail store is located.
- - Destination based states normally charge sales tax based on the location where the buyer takes possession of the items sold. Details on Destination Based Tax in Evosus can be found here.
- Sales Tax in Canada and Australia - GST, PST, and HST
In Canada and Australia, sales tax applies to both consumer and business purchases. That is why sales tax can be applied to AP vendor invoices in Canadian and Australian databases. Once the sales tax appears on a customer or vendor invoice, it appears on the Sales Tax Due Report (Canada, Australia).
A use tax is similar to a sales tax, but it is calculated based on the cost of the item rather than the retail price. The use tax amount is generally built into the price of the invoice and most states do not require retailers to disclose the amount of use tax being charged, but you may be required to disclose that use tax is being charged.
- Use tax is calculated on a sales order, and then updated when invoiced
When use tax is assigned to a sales order, the application calculates the tax based on the current cost of the item. If the cost of the item changes between the when the order is created and when it is invoiced, the application will recalculate the use tax based on the new cost.
In Job Costing, the application will recalculate the use tax when the job materials are delivered.
- You cannot invoice an order or deliver job materials that result in a negative quantity
You cannot invoice an order or deliver job materials with a use tax assigned if any of the items will result in a negative quantity on hand. That is because if the item has a negative quantity, the application cannot calculate the cost of the item.
- Use tax cannot be applied to all item types
Use tax can only be applied to the following item types: stock, non-stock, and special order items. It cannot be applied to labor, or other item types because those item types do not have a unit cost.
- Use tax can be applied to quotes, orders, and job materials
It will also appear on the Sales Tax Due Report when items are invoiced, or delivered if it is a job material.
- Cannot be applied to job bills
A use tax cannot be applied to a job bill because a job bill does not have materials.
- You can hide the use tax on an invoice
If use tax is applied to a transaction, the application will pass the cost along to the customer. If you hide the use tax on the invoice, the retail price of the item will be increased to include the cost of the use tax.
Use tax is hidden at the store level using the Hide use tab on quotes, Hide use tax on sales, and Hide use tax on service boxes on the Store screen (Administration > System > Stores > Stores > Select a store > Defaults tab).
- Use Tax - Not Collectable
If you do not want to pass the use tax on to the customer, select the Use Tax - Not Collectable in the Tax Type field on the Tax Authorities screen (Administration > Accounting > General Setup > Tax Authorities). The tax is calculated and postponed, but it does not increase the invoice amount. If you select this option, you have to select a Use Tax - Not Collectable Expense Account. This account is where the application posts the expense that is not passed on to the customer.
- Changes to unit cost on an invoice always post to miscellaneous income
Changes in unit cost on an invoice where use tax is applied always post to miscellaneous income.
Business & Occupation Tax
Business and occupation tax is the cost of doing business in a state. This tax is not charged to the consumer. When a business tax is assigned to an order, the application calculates the tax based on the retail price of the items. The tax will not display on the order, but will appear on the Sales Tax Due Report.
- It can be applied to all items
Business and occupation tax can be applied to all inventory item types (stock, non-stock, etc.), and it applies to quotes, orders, and job bills.
- It cannot be applied to job materials
Since job materials do not have a retail price, business and occupation taxes cannot be applied to job materials.
Receipts Tax (also known as excise tax)
Generally, a receipts tax is calculated based on the invoice total, which includes the tax. This means a receipts tax is calculated using factored rates.
- It can be applied to all items
Receipts tax can be applied to all inventory item types (stock, non-stock, etc.), and it applies to quotes, orders, and job bills. It will also appear on the Sales Tax Due Report once it is invoiced.
- It appears on the invoice
Receipts tax is charged to the customer and it appears on the invoice.