A/R Sales Tax Audit Trail

 Application Overview

 The purpose of this feature is to give a detailed tracking for sales tax so that complete auditing information can be available (especially for state auditing). This feature enables users to create Sales Tax Liability Reports for each tax code based on invoices or cash receipts. It also gives users the choice for printing a report for fully paid invoices only. If the user is tired of paying sales tax for which the invoice has not been paid off or paid in full, or if the user would like to be able to track down the exact sales tax amount based on fully-paid invoices, this feature will serve as a remarkable vehicle for business. 

Run Instructions

 Go to:  Elliott Main Menu à Util Setup à Global Setup à Acct à A/R Sales Tax Audit Trail

Enabling Sales Tax Audit Trail

1.  Use Sales Tax Audit Trail?

This is a yes-or-no question for updating the Sales Tax Liability file (refer to Figure 2D.1). If the user answers “Y” to this question, the system will create the sales tax information record in the Sales Tax File during Posting Invoices to A/R.

2.  Sales Tax Liability Report Based On

The Sales Tax Liability may be initially set up to run based on “I” - Invoice or “C” - Cash Receipt.  If you answer “I”, the sales tax will be based on all invoices regardless of any payments made by the customer against the invoice(s).  If you answer “C”, the sales tax will be based on the actual receipt of payment from customer against the invoice(s).   Note:  Once your choice of method has been selected, it cannot be changed.  Doing so may cause unpredictable results!

3.  Print Grand Total For All Amounts?

If you want the Sales Tax Liability Report to print a grand total of all taxed amounts, answer “Y” to this question.  If you don’t, answer “N” to this question.

4.  Page Break Between Tax Code?

If you answer “Y” to this question, the system will perform page breaks when printing the Sales Tax Liability Report.

5.  Use Extended 9 Digits Tax Code For Sales Tax Liability Report?

This is an optional field.  Some companies need the ability to use a 9 digit tax code.  If you answer “Y” to this question, you will be able to see a 9 digit tax code on the report.

How Does This Feature Work?

Eventually, there is a work file associated with the Sales Tax Audit Trail feature. This work file will get updated during four processes, which are 1) Post Sales & Cr/Dr Memo Transaction, 2) Post Invoice to A/R if COP module is used, 3) Re-apply Cr/Dr Memo, and 4) Post Cash Receipts. We will discuss what happens to this work file during these four processes in the following paragraphs.

 1 and 2. Post Sales & Cr/Dr Memo Transaction and Post COP Invoice to A/R

Upon the posting of invoices, STANDARD ELLIOTT will create Sales Tax Liability records. Each record consists of 18 fields, which can be found in the attached sample report. All the fields except Cash Receipt Date (Csh-Date), Receipt-Amt, Adjust-Amt, and Adj-Tax-Amt will be written with the data from the invoice. At this stage, multiple records may be created for one invoice due to the possible multi-tax codes.

If a credit memo was entered in COP Order Entry, STANDARD ELLIOTT will write the information to the Sales Tax Liability file in the field of Adjust-Amount and Adj-Tax-Amt upon posting.

If the Apply-to field is blank or Apply-to is not found, the Sales Tax Liability records will not be updated.

3 and 4. Re-apply Cr/Dr Memo and Post Cash Receipts

Upon the posting of Cash Receipts Processing, STANDARD ELLIOTT will update the fields of Csh-Date and Receipt-Amt based on the cash receipts information. If the Re-apply function was executed, STANDARD ELLIOTT will write the total of New Amount-1 and New Amount-2 to the Adjust-Amount field.

If the Apply-to field is blank or Apply-to is not found, the Sales Tax Liability records will not be updated.

Sales Tax Liability Reports

In order to get a glance of how much sales tax the user needs to pay to each state, county, and city, two reports are available to the user. One is Sales Tax Liability By Invoice, and the other is Sales Tax Liability By Cash Receipts. They both can be accessed by going through A/R à Reports à Ar Enh Report à Sales Tax Liability Report. Figure 2D.2 and Figure 2D.3 display the print screens of each kind.

The report by invoice is asking the user to enter starting and ending Invoice Dates versus Cash Receipts Dates in the report by cash receipts.  The report by cash receipt has an additional field - 8. “Print Full-Receipt Invoice Only?”.  Figure 2D.3 displays the Sales Tax Liability Report by Cash Receipts.  The “Receipt-Amt” and “Adj-Tax-Amt” columns will only display if the report is by Cash Receipts.  As you can see, the report by Invoice does not contain these two columns (Figure 2D.4).

 Figure 2D.2. Sales Tax Liability Report by Invoice.

Figure 2D.3 Sales Tax Liability Report by Cash Receipts.

Figure 2D.4 shows a sample of a Sales Tax Liability Report.