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.• How p-card use tax is

applied?• How to locate p-card use

tax?

PRESENTATION OBJECTIVES (CONT.)

• What to do if duplicate tax is charged?

• How to locate a use tax reversal?

• Expenditure codes related to use tax.

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.

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.

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.

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.

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).

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

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

§42-5159http://www.azleg.state.az.us/ars/42/05061.htm [78 exemptions!]

http://www.azleg.state.az.us/ars/42/05159.htm [73 exemptions!]

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.

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.

DUPLICATE TAX• 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.

1. Make a copy of the vendor’s invoice showing the sales tax applied to the transaction.

2. 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.

3. Send an email with the information above and a brief explanation to [email protected].

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.

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

CONTACT INFORMATION

Questions? Need Help?

• Kathy McQuitty: 480-965-8479 or [email protected]

• Michael Mumpower: 480-965-9890 or [email protected]

• Bari Simmons: 480-965-0108 or [email protected]  

QUESTIONS?