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The Double Play: To tax or not to tax

The Double Play: To tax or not to tax. Presented by: Michael Mumpower- Accountant Sr. Tax Services. Presentation Objectives. Use tax Definition . Sales and Use Tax as a purchaser. Use tax rate. How is use tax paid? Nontaxable services. Exemptions from Sales and Use Tax.

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The Double Play: To tax or not to tax

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  1. The Double Play: To tax or not to tax Presented by: Michael Mumpower- Accountant Sr. Tax Services

  2. Presentation Objectives Use tax Definition. Sales and Use Tax as a purchaser. Use tax rate. How is use tax paid? Nontaxable services. Exemptions from Sales and Use Tax. How p-card use tax is applied? How to locate p-card use tax?

  3. Presentation Objectives (cont.) What to do if duplicate tax is charged? How to locate a use tax reversal? Expenditure codes related to use tax.

  4. USE Tax Defined Tax on the use, storage or consumption of tangible personal property in Arizona. Arizona Purchasers are liable for Use Tax on goods purchased from an out-of-state vendor that did not collect the Use Tax If the Sales tax has been paid on the purchase, then exempt from Use Tax.

  5. Sales and use tax as a purchaser The University generally pays Sales Tax to the Vendor (or pays Use Tax to the state if the vendor does not charge Sales Tax) The University is NOT an exempt entity for AZ Sales and Use Tax purposes. Specific exemptions do apply for certain purchases (ie: R&D) per the AZ Statutes so no Sales or Use Tax is owed at purchase.

  6. Use tax rate AZ State Use Tax rate is 6.6%. Counties generally do not impose Use Tax. The university is not subject to City Use Tax.

  7. How is use tax paid? Use tax is paid by ASU directly to the Arizona Department of Revenue. It is not paid to the vendor from which the purchase was made.

  8. Nontaxable services Professional and personal services Repair, maintenance and Installation Services if charges are separately stated on invoices and records Warranty or service contract (if not required to purchase with the tangible personal property, and is charged separately on an invoice).

  9. Nontaxable services (CONT.) Delivery charge (freight or shipping) if separately stated on the invoice. Internet access and cable services Conference registration fees Professional membership dues

  10. Exemptions from the sales and use tax Machinery and equipment used in R&D Printed and other media materials (available to the public) by ASU Libraries. Liquid, solid or gaseous chemicals used in R&D Purchase for resale Others as set forth in ARS §42-5061 or ARS §42-5159 http://www.azleg.state.az.us/ars/42/05061.htm[78 exemptions!] http://www.azleg.state.az.us/ars/42/05159.htm[73 exemptions!]

  11. How p-card use tax is applied A query is run in PaymentNet on these criteria below to find applicable use tax purchases. • The PaymentNet file is then reviewed and loaded into Advantage.

  12. How to locate p-card use tax On your Advantage Reports the use tax charge will: Have the same expenditure code as the original transaction Have the Last Name of the Employee’s card Have the partial name of the company Have the approximate post date of the transaction in PaymentNet Be 6.6% of your total transaction amount.

  13. Duplicate tax • Make a copy of the vendor’s invoice showing the sales tax applied to the transaction. • On the top of the copy write your agency, org. and the expenditure code the transaction was applied to or print a copy of your Advantage report that shows this information. • Send an email with the information above and a brief explanation to Michael.Mumpower@asu.edu. If you locate a use tax charge on your Advantage reports and you also have been taxed by the vendor follow the subsequent steps to have your duplicate sales tax reversed.

  14. How to locate a use tax reversal A use tax reversal transaction number will always begin with USETX… • Usually the use tax reversal will be the same amount as the applied use tax by the batch process. • If you have trouble locating a reversal call Michael Mumpower at 5-9890.

  15. Expenditure codes Remember if your p-card transaction is miscoded in PaymentNet there is a possibility that use tax was applied or not correctly applied to a transaction in your Advantage reports. The most popular use tax reversals are for: Conference Registrations Membership Dues Advertising

  16. Contact information • Kathy McQuitty: 480-965-8479 or Kathleen.McQuitty@asu.edu • Michael Mumpower: 480-965-9890 or Michael.Mumpower@asu.edu • Bari Simmons: 480-965-0108 or Bari.Simmons@asu.edu Questions? Need Help?

  17. Questions?

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