How to: Set Up Use Tax and Purchase Tax

Sales tax includes taxes that companies pay for using items:

Use tax (United States) – Use tax is a United States sales tax that is paid on items that are purchased by a company and are used by that company instead of being sold to a customer. The company must pay sales tax for those items to the government, in the form of use tax.
Purchase tax (Canada) – Purchase tax is a Canadian sales tax that is paid by a company on items that are purchased from a vendor. When a company purchases items for use by the company itself, the vendor charges the appropriate sales tax for the items.

To set up use tax for a purchase order

In the Search box, enter Purchase Orders, and then choose the related link in Order Processing.
In the Purchase Orders window, on the Home tab, in the New group, choose New.
On the Lines FastTab, fill in the fields as described in the following table.

Field Description

Tax Area Code

The tax area code of the vendor.

Use Tax

Select to calculate use tax on the purchase line.

Tax Liable

Select to set up tax liability for the vendor.

Field	Description
Tax Area Code	The tax area code of the vendor.
Use Tax	Select to calculate use tax on the purchase line.
Tax Liable	Select to set up tax liability for the vendor.

On the Invoicing FastTab, fill in the fields as described in the following table.

Field	Description
Tax Liable	Select to set up tax liability. Important This field is available in the Purchase Header window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.
Tax Area Code	The tax area code of the vendor. Important This field is available in the Purchase Header window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.
Tax Exemption No.	The company's tax exemption number. You can enter a maximum of 30 alphanumeric characters. Important This field is available in the Purchase Header window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.
Provincial Tax Area Code	The tax code for the province. Important This field is available in the Purchase Header window, but it is not shown by default. To select the field, you must first add the column that shows this field. For more information, see Personalize the User Interface.

In the Search box, enter Tax Details, and then choose the related link.
In the Tax Details window, on the Home tab, in the New group, choose New.

In the New - Tax Details window, fill in the fields as described in the following table.

Field	Description
Tax Jurisdiction Code	The tax jurisdiction code for the tax detail entry.
Tax Group Code	The tax group code for the tax detail entry.
Tax Type	Sales and Use Tax – To apply both sales tax and use tax to the tax detail entry. –or– Excise Tax – To apply excise tax to the tax detail entry. –or– Sales Tax Only – To apply only sales tax to the tax detail entry. –or– Use Tax Only – To apply only use tax to the tax detail entry.

Tax Jurisdiction Code

The tax jurisdiction code for the tax detail entry.

Tax Group Code

The tax group code for the tax detail entry.

Tax Type

Sales and Use Tax – To apply both sales tax and use tax to the tax detail entry.

–or–

Excise Tax – To apply excise tax to the tax detail entry.

–or–

Sales Tax Only – To apply only sales tax to the tax detail entry.

–or–

Use Tax Only – To apply only use tax to the tax detail entry.

In the Search box, enter Company Information, and then choose the related link.

In the Company Information window, on the Tax FastTab, fill in the fields as described in the following table.

Field	Description
Tax Area Code	The company's tax area code. The tax area code is used in conjunction with a tax group code field and the Tax Liable field to find the necessary information for calculating sales tax.
Tax Exemption No.	The company's tax exemption number. You can enter a maximum of 30 alphanumeric characters.
Provincial Tax Area Code	The tax code for the province.

In the Search box, enter Locations, and then choose the related link.
In the Locations window, select the required location. On the Home tab, in the Manage group, choose Edit.

On the General FastTab, fill in the fields as described in the following table.

Field	Description
Do Not Use For Tax Calculation	Select to specify whether the tax information included on this location record is to be used for sales tax calculations on purchase documents.
Tax Area Code	The tax area code for the location. The tax area code is used in conjunction with a tax group code field and the Tax Liable field to find the necessary information for calculating sales tax.
Tax Exemption No.	The company's tax exemption number. You can enter a maximum of 30 alphanumeric characters.
Provincial Tax Area Code	The tax code for the province.

In the Search box, enter Tax Details, and then choose the related link.
In the Tax Details window, on the Home tab. In the New group, choose New.
Select the Expense/Capitalize check box.

Note

This check box must be selected if the tax paid is not recoverable.
Choose the OK button.