USA use tax on purchases that were not taxed by the supplier

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Hi, everybody!

The USA business resells products, and therefore it buys those items from suppliers without paying sales tax (very different from the way VAT taxes work in other jurisdictions).

When the business sells those items it did not pay sales tax on, it collects sales tax and remits it to the state in the US where the item was sold (or, the state to which it was shipped).

However, the rule is that if the business buys products without paying sales tax on it and uses the product, rather than selling it, the business must calculate and pay a use tax (same amount as the sales tax).

I’m trying to figure out how to do this in manager.io. There is some info in a 2014 thread (closed in 2023): How to handle use taxes on purchases.

Is there any other way to do it now rather than using something like the workaround @alasdair described in the 9th post in that thread?

I cannot even get that method to work, since it seems that Manager’s options for Tax Codes have changed since that was posted in 2019.

@lubos, would you be willing to chime in, since you were involved in that discussion and know both what is now possible as well as what is planned for the future?

Thank you very much!
ETC

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Have you tried this?

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@shahabb,

No I haven’t tried that (yet). The transaction that brought this up was actually for a tool bought from a supplier that normally supplies inventory. So it was not put into inventory, but expensed as a small tool.

But … we could put it into inventory and then try that method.

Thank you for the info. I certainly had not thought of that!

ETC

4

@shahabb,

I just tried to do what you suggested. I don’t see any “Allocation” fields. I’m using v. 24.7.17.1735.

Is there something I need to activate to get that?

Thank you.
ETC

Tool write off attempt to accrue use tax
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I see the same as @shahabb make sure as per forum rules at FAQ - Manager Forum that you have the most recent update

Manager advances very quickly, simplifying and adding features and capabilities. Sometimes, bugs occur with new releases. But these are usually fixed rapidly, often within minutes. So if you encounter a problem with the desktop or server editions, update Manager , even if you recently did. (The cloud edition is always up to date.) You can check the latest version at https://www.manager.io/desktop/download/ .

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@eko he is using Periodic Revaluation of Inventory in which cost allocation is not possible.
@etc do it through Journal Entry. Just you have to manually enter the costs.

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@shahabb, Thank you. I plan to do it with journal entries.

@eko, Thank you for the reminder.

ETC

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Then an additional one… :slight_smile: In the same rules I referred to it also says:

  • Don’t sign your posts. Every post has your profile information attached to it.
2 Likes
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@lubos Even if its Periodic revaluation i think write-off account allocation should be still an option, and the target account should be credited/debited with qty*unit price along with tax code selection.