Sales Tax Credit - Order Entry

The following reports, used for reporting Sales Tax or Zone Tax, are found in:

• A/R (Module 2)
  • Sales Analysis (Task 10)
    • State tax summary - SHSTAX

    • State tax summary with optional detail - TAXSUM

    • Tax Zone summary by division # / zone / date range - TZNRPT

    • Tax Zone summary by zone / division # / date range  - TZNTZN

SCENARIO:

ABC Construction is a new customer.  The A/R Customer Master file (Task 17) is marked as a T taxable customer or with taxable tax zones.  (Or the Order Processing (Module 6), Alternate ship-to file (Task 19) is marked as a T taxable customer or with taxable tax zones.) The customer buys something for $100.00 and is charged 7% sales tax $7.00, for a total invoice of $107.00. 

With this scenario, the $100.00 is on the above tax reports as a taxable customer with $7.00 tax. 

Several days later the customer’s accounting clerk contacts you with a tax exempt form & requests the sales tax be taken off the invoice.

The $100.00 needs to be credited off of the as taxable sales and the $7.00 needs to be credited off of the tax.  Also the $100.00 needs to be added as a non-taxable sale.

NOTE:  In order for the above Sales Tax and Zone Tax reports to be correct the credit memo should be for the whole amount of the invoice ($107.00), not just the amount of the tax ($7.00).   Then a whole new invoice needs to be processed as being non-taxable

STEP 1:

This step needs to be processed while the customer or alternate ship-to records are still taxable.  A credit memo for the whole invoice will need to be entered into:

• Order processing (Module 2)
  • Order Entry & Editing (Task 1)
    • Enter New/change Existing Order (Sub-task 1).  This would be entered the same as a return of merchandise.
      • Open up a new order in Order Entry for the customer getting the sales tax credit,
        • Use the same alternate ship-to record as the original invoice.  
        • When the cursor is at the “Any change?” prompt, type in a 6 for Field #6: Sale type:

        • ​Enter in a 3 for Credit Memo.

        • If the original invoice is still open on the customer’s account, the credit memo may be applied to the original invoice #.. While still on the first screen of the order:  When the cursor is at the “Any change?” prompt, type in a 11 for Field #11 Apply to #:.  Enter in the original invoice #.

      • ​On the Item Screen:    Type in items, Quantities, prices etc… the same as the original invoice.  This Credit memo should be for the same amount as the original invoice with the same amount of sales tax, or zone tax.  Using the scenario above, the credit memo should be for $100.00 in sales & $7.00 tax for a total of $-107.00.

      • On the Action/Collection Screen:

        •  Select Action 22 - CR Memo

        • The cursor will go to the “Pay Method” column. 

          • ​Use Field 10 Charge.

          • Fill out any necessary fields on the shipping screen

          • Print credit memo & send to customer

          • After this credit memo is posted all the way through to the customer’s account it will credit the $100.00 off of the taxable sales and it will credit $7.00 off of the sales tax or zone tax.

STEP 2:

Correct/Change the tax status and/or tax zones in the Customer master.  Go to:

• Accounts Receivable (Module 2)
  • Customer master (Task 17)
    • Change existing customer record
    • Bring up the customer record
    • Correct Field 20 St. tax flag:
    • Correct Fields 25 Tax zone A:, 26 Tax zone B: & 27 Tax zone C:.

STEP 3:

Correct/Change the tax status and/or tax zones in the Alternate ship-to file.  Go to:

• Order Processing (Module 6)
  • Alternate Ship-to File (Task 19)
    • Change existing ship-to record (Sub-task 2)
    • Bring up each alternate ship-to record for the customer 
    • Correct Field 18 State tax:
    • Correct fields 19 Tax zone A:, 20 Tax zone B: & 21 Tax zone C:.

STEP 4:

Create a new NON-taxable invoice for the customer.  Go to:

• Order processing (module 2)
  • Order Entry & Editing (Task 1)
    • Enter New/change Existing Order (Sub-task 1).
      • Open up a new order for the customer getting the tax credit.  
        • Use the same alternate ship-to as the original invoice.  This will be a new invoice for the same items/prices as the original invoice….except this should not have any sales tax or zone tax.  Using the above scenario, this invoice should be for $100.00 with no sales tax or zone tax.

      • Select the action “Invoice” & field #10 Charge.

      • ​Fill out shipping screen as necessary

    • ​Print invoice & send to customer

• ​After this invoice is posted all the way through to the customer’s account the $100.00 sales are in the Non-taxable sales or in a non-taxable zone.

NORMAL PROCESSING:

• Order Processing (Module 6)
  • ​Invoiced Order Holding File (Task 2)
    • ​Once the Credit Memo and invoice are transferred to the Invoiced Order Holding file (Task 2), (either during the nightly processing with all the other invoices for the day, or by using Task #25 Move invoiced order from 1-2); they will appear on the invoiced order edit list and posting register.  They should be processed and posted as normal.
    • Post invoiced orders (Sub-task 5). Save posting as normal.

• Accounts Receivable (Module 2)
  • ​When the Credit Memo and new invoice are posted from Order Processing, Task #2 -Invoiced Order Holding File over to Accounts Receivable, they will need to be posted just like normal:

• Sales Entry & Editing (Task 1)

  • ​Post sales records to A/R files (Sub-task 5).  Save posting journal as normal.

The customer account will look like:

Original invoice #1234  $107.00

Credit memo #1250                 -107.00            applied to invoice #1234

New invoice #1251                  $100.00           ready to be paid by customer

Original invoice and credit memo will clear off of the customer’s account at month end after the “Clear paid invoices from A/R open” is done.