How to troubleshoot the Sales Tax Report - FAQ

Common questions on how the system defines taxable and nontaxable sales, and how adjustments affect your sales tax report in Sage BusinessWorks.

Which invoices does the Sales Tax Report include?

• If the summary screen includes a Sales Tax ID, the invoice appears in the report. The invoice will show even if the sales tax amounts are zero
• If you don’t define a sales tax jurisdiction, the invoice won’t appear in the report

When do amounts appear in the taxable or nontaxable columns?

The taxable and nontaxable values depend on the taxable status of the transaction

• Taxable line item amounts appear in the taxable column 
• Nontaxable line item amounts appear in the nontaxable column

Why isn't freight included in the taxable column?

Assign the sales tax jurisdiction as freight taxable. Select the Freight taxable checkbox for the sales tax jurisdiction in AR, Utilities, Sales Taxes, Maintain.

How do I report total sales for nontaxable customers?

• Set up a tax jurisdiction for exempt customers in AR, Utilities, Sales Tax, Maintain. Use an ID such as EXMT and set the tax rate to 0.00%
• Assign this tax jurisdiction to all tax-exempt customers in Maintain Customers. Set as the 1st sales tax
• Sales for these customers reflect on the Sales Tax Report under the exempt jurisdiction

Why does the Sales Tax Report for 'All current transactions' include invoices from prior months?

All current transactions include any open invoices and all transactions posted since the last month-end close.

• The report for current invoices will include any open invoices, including open prior month invoices 
• To view invoices for a specific month, select the month and year from the Include what entries list

How do credit and debit memos affect sales tax reporting?

Sales tax reporting differs based on how you distribute the amounts of the adjustment.

• After changing the distribution, click the Tax reporting? button on the Credit or Debit Memo screen to see how taxable and nontaxable sales are affected
• Credit memo: A negative taxable amount on a credit memo increases the sales tax liability. Make sure the tax-reporting screen is correct before posting 

The tax reporting didn't change when I posted a credit memo

The system doesn't calculate taxable and nontaxable sales on the following.

• The system can’t determine taxable and nontaxable sales automatically. You’ll need to update the tax-reporting screen manually
• If you don’t distribute any adjustment to sales tax, the system treats the full amount as nontaxable
• If you distribute part to sales tax, the system calculates taxable sales from the sales tax credit

How does the system calculate taxable and nontaxable sales on credit and debit memos?

The table shows the formulas Sage BusinessWorks uses to calculate taxable and nontaxable sales based on the credit or debit memo application and distribution.

Applied to	Distributed to	Formula
Invoice Open Credit Cash Refund Deposit Finance Charges	Sales Adjustment or Bad Debt	No adjustment to taxable or nontaxable sales columns. Total sales adjust according to the amount of credit or debit memo
Invoice Open Credit Cash Refund Deposit Finance Charges	Sales tax only	Taxable sales = sales tax amount / Sales tax rate Nontaxable sales = taxable sales * (-1)
Invoice Open Credit Cash Refund Deposit Finance Charges	Sales tax and another account, such as a sales account	Taxable sales = Sales tax amount / Sales tax rate Nontaxable sales = 0
Invoice	No sales tax credit	Nontaxable sales = Amount of credit or debit memo Taxable sales = 0
Invoice	Void	Taxable and nontaxable sales adjust by the amount of the original invoice

 

Handy Resources

• View the Sales Tax Reporting document for in-depth details about troubleshooting your Sales Tax Report
• Sales Tax set up, correcting, and troubleshooting - FAQ
• How to interpret A/R credit or debit memo sales tax reporting distribution