Overview
The system update for v23b8.2 will provide a new tax liability report with enhanced functionality. The previous version of this report is still available to run while users make the transition from old to new with the help of their CPA and tax accountants. The new report AND the need to run both reports will begin immediately after the update. Please make sure appropriate users have access to the new Sales History Report through report/admin options in Admin. Please run the sales and use tax report to make sure that the message for running both old and new reports is present. If this message is not present, please contact support@pacific-solutions.com When the new report is activated and you select to run the sales taxes report, the system will prompt you to choose between "old" and "new" reports.
You must be on a system version of v23b8.2 or newer and be running FileMaker 19 or newer to activate this report.
The new sales and use tax liability report will capture changes in use tax that happen retroactively before taxes are marked paid and processed. When costs to materials are recognized against invoices in previously processed tax periods, the current period tax report will true up the tax as entries on the current, open tax liability report.
**Silent Use Tax type. Users that are utilizing the silent use tax type, the new sales and use tax report will display the actual costs of materials only. The report uses the fully verified actual costs of materials for both rev rec and non rev rec jobs and in both systems.**
Report Transition
Jobs with existing invoices and progress invoices, will continue to report ongoing invoicing to the legacy (old) sales tax report. Invoices created prior to the update and invoices created after the update inside the same job will continue to keep the invoicing on the legacy (old) tax report. The tax report process will contain two clear lanes; Invoicing already in progress and new invoices being created on jobs that had no prior invoices created after the update. Users will need to run both the legacy "old" and the new sales tax reports to capture all invoices and use tax information. Once jobs in progress have completed and cleared through the system, only the new tax report will be needed.
When users run the legacy sales tax report, the report will notify the user that the new sales and use tax report also needs to be run.
When users run the new sales and use tax report, if there are transactions on the legacy sales tax report, the new report will notify users that there is information on the legacy report that also needs to be run.
You will need to run two (2) tax reports during transition.
Tax Report Column Definitions
Each column on the new tax report represents the information necessary for tax remittance. The tax report has two layers to the report; cumulated tax summaries by tax authority and detail drilldown by each tax authority for each receivable invoice.
This report captures the tax when the accounts receivable invoice is created. The tax authorities, types and rates are determined by the tax code assigned to the job and invoice.
The tax summaries by tax authority has these columns:
A | B | C | D | E | F | G | H | I | J | K | L |
Tax Authority | Tax Type | Tax Rate | Gross Sales | GS/WO Tax | Exempt Mat | Exempt Labor | Taxable Materials For Sales Tax | Taxable Labor | Taxable Cogs For Use Tax | Taxable Total | Total Tax |
The name of the authority in which the tax rate belongs | The name of the type of tax for the authorities in the tax code | The tax rate for each authority in the tax code | The gross sale amount total including any sales tax on the invoices | The sale amount total minus any sales tax on the invoices | Materials that are marked non-taxed and jobs that are part of the tax exempt tax type | Labor that is marked non-taxed, jobs that are part of the tax exempt and material only tax types | Material total that qualifies for tax to be calculated for sales tax (and GST/PST/HST tax type) | Labor total that qualifies for tax to be calculated for sales tax (GST/HST tax type) | Costs of materials for invoices that are using the silent use tax tax type (and PST tax type) | Total taxable amount from columns H+I+J | Total tax liability from K*C (the taxable total times the tax rate) |
The tax authority detail has these columns:
| A | B | C | D | E | F | G | H | I | J | K | L | M | N |
| Tax Authority & Tax Rate | Branch | Type | Invoice # | Date | Gross Sales | GS/WO Tax | Exempt Mat | Exempt Labor | Taxable Materials For Sales Tax | Taxable Labor | Taxable Cogs For Use Tax | Taxable Total | Total Tax |
| The name of the authority in which the tax rate belongs | The store branch location of the tax type | The name of the tax type at the invoice | The invoice number of the receivable | The invoice date of the receivable | The gross sale amount total including any sales tax on the invoice | The sale amount total minus any sales tax on the invoice | Materials that are marked non-taxed and jobs that are part of the tax exempt tax type | Labor that is marked non-taxed, jobs that are part of the tax exempt and material only tax types | Material total that qualifies for tax to be calculated for sales tax (and GST/PST/HST tax type) | Labor total that qualifies for tax to be calculated for sales tax (GST/HST tax type) | Costs of materials for invoices that are using the silent use tax tax type (and PST tax type) | Total taxable amount from columns H+I+J | Total tax liability from K*A (the taxable total times the tax rate) |
The tax authority summary report. The columns used for totals are separated by borders and the column show the taxable total calculation in the header.
The invoice detail also has this header with additional columns.
Marking Taxes as Paid
The sales and use tax report has action buttons at the top of the summary report to drill down into the detail of specific tax authorities such as state, county, misc 1, etc.
The tax report can be marked as paid, meaning it has been processed (you will need to pay them through AP). The system will capture the report details and the date you marked them paid.
The system will prompt for a tax run description. This will be helpful for quarterly tax report and transitional tax runs.
An accounts payable bill can be created from the tax report by using the create AP button. This is only possible if you maintain one (1) tax type in your organization. If you carry a blend of tax types such as both sales tax and silent use tax, you will need to use the report to manually create your AP invoices. The taxes must be marked as paid before an AP invoice can be generated.
The tax report must be marked as paid so that those invoices do not continue to show on the next month's report.
Sales Tax History Report
Once taxes have been marked paid, these tax run reports will be viewable inside the sales tax history report from the accounting set of reports. Use this report to view the historical tax reports.
In the tax paid history report, the paid tax runs can be searched by start and end date range and the paid description.
The magnifying glass will drill down on the report detail that was in that particular report.
The tax history reports can be printed and exported.
Tax True Up Entries for Use Tax
Once taxes are marked paid, that fiscal tax period cannot be affected by system processes such as costing materials in a use tax or PST on cost environment. When vendor bills are verified in the current period for materials involved on invoices in a closed/processed tax period, those entries are included in the current open tax period. The taxes "true up" when the next tax report is run.
For example, if April 2023 taxes are marked as paid and essentially "closed". Vendor bills processed in May 2023 for materials on that AR invoice back in April, the tax for those costs will be included in the May 2023 tax report run. Those lines will be indicated as true up lines in the next tax report.
Totals highlighted in red indicate totals of tax that include true up tax entries. The tax authority summary report highlights the total tax amounts in red.
The tax detail report will highlight the invoice entries in red as well as show the invoice date for tax changes.
Reporting Period Preparation Guidelines
- These guidelines are suggestions on preparing the tax evaluation process. Please consult with your tax preparer and/or CPA for your best advice. We find that these guidelines are helpful to many businesses and have been derived from years of experience with highly successful CPAs and accountants.
- Perform a reporting period check roughly 3/4 of the way into the fiscal period. This gives time to correct any errors or omissions that could be time consuming so that you are not pressed for time at the period cut off.
- Establish a reporting period cutoff date. If your reporting period is monthly, establish a data entry cutoff date around the 10th or 15th of the following month. Data dated after this cutoff will firmly need to post in the next open reporting period. This would include but is not limited to; creating AR invoicing, processing AP invoices, collecting payments, making payments, reconciling the bank statement, making journal entries, posting payroll entries, etc.
- Once the cutoff date has passed and come to a firm close, freeze the reporting period in the system with the freeze books option. This will keep any postings from mysteriously showing up in a closed reporting period.
- Begin the reporting process once the books have been frozen.
- The sales and use tax report, once marked paid cannot be undone. Be sure the reporting period activities are finalized before processing the sales and use tax report.