About Use Tax

Use tax is a state tax on goods purchased in another state for use in the taxing state.

• It can be applied to line items on both purchase orders and vendor invoices.

• If the selected vendor doesn't have an address entered in Contact Management, AptaFund will consider it an out-of-state vendor.

• Use tax must be remitted separately to the state, so it is not included on warrants sent to vendors.

• Use tax is tracked within the system by the Use Tax Liability balancing account, defined in the Element Value Maintenance window. See About Balancing Accounts & Balancing Account Types for more information.

• You cannot apply sales tax and use tax on the same purchase order or invoice. However the PO or invoice may include services that aren't taxed AND goods that are taxed. The Apply Tax command applies sales tax, not use tax.

Setup for use tax

1. Select Purchasing Configuration from the Purchasing menu.

2. Click the box for Automatically Default Use Tax Checkbox, and click the Edit button.

3. Set the Configuration Value to Yes, and click Save.

4. Click the box for Default Use Tax Rate, and click the Edit button.

5. Enter the tax rate in the Configuration Value field, and click Save. For example, if the tax rate is 6%, enter 0.06, not the digit 6.
   Note: Because use tax is a state-levied tax, it often has a different rate than the regular default tax rate.

How the use tax feature works

On purchase orders

AptaFund determines if the vendor is out-of-state and, if out-of-state, automatically applies use tax to line items on the purchase order. The rate can be edited as necessary in the Tax Rate field on the purchase order.

To apply a discount or premium after tax is computed, set Use Tax to Yes or No and Tax Rate % to 0 while creating the PO.

To apply a discount or premium before tax is computed, set Use Tax to Yes and Tax Rate % = whatever the tax rate is while creating the PO.

On vendor invoices

Different invoice types

Regular: When use tax is defined on a regular purchase order, the corresponding vendor invoice will display this information. The rate can be edited as necessary in the Tax Rate field on the invoice.

Direct: If you are creating a direct invoice, the invoice will default the Use Tax status to Yes for line items ordered from out-of-state vendors.

Employee: When creating an employee invoice, the Use Tax status will default to No, but you can change it to Yes if needed.

Applying a discount or premium on invoices with use tax

To apply a discount or premium after tax is computed, set Use Tax to Yes or No and Tax Rate % to 0 while creating the invoice.

To apply a discount or premium before tax is computed, set Use Tax to Yes and Tax Rate % = whatever the tax rate is while creating the invoice.

Return to Apply Tax to a Vendor Invoice

Return to Apply Tax to a PO

Return to Add Items to a Purchase Order

Return to Purchase Order Overview