- Create a use tax payable GL Account that will serve as a bucket for the eventual check you'll cut to the government.
- Navigate to the Tax Profiles module (Accounting > Tax Profiles) and create a new tax profile. You'll essentially set it up just like any other tax profile by setting up tiers (e.g. Tax 1, Tax 2, etc), associated GL Accounts (most likely you'll have one tier going to one GL Account, but if you need to pay use taxes for multiple jurisdictions you'll need to create multiple GL Accounts in Step 1 above), rates for the different category record types, and exceptions.
- Save the record.
- Navigate to the Actions menu and select Designate Tax Profile as Use. This will flag it as the system's use tax profile. Note that only one tax profile at a time can be designated as a use tax profile.
In Purchase Orders and Purchases
- When you create a PO or purchase and flag it for use tax by selecting the check box in the lower right corner, it loops through the line items and calculates the correct tax for each item based on the use tax profile.
- At the end of this process you're shown a single use tax value. This tax value is below the total field because it's not incorporated into the transaction total.
- When the purchase is opened, general ledger transactions are created based on the use tax infrastructure. (Note: this only happens when the purchase is opened. The use tax amount in the purchase order does not affect the general ledger; it's an estimate.)
Use Tax Payments
When you're ready to pay the use taxes that have accumulated, navigate to the use tax GL account(s), note the balance, and either create an OTHER type disbursement to cut a check or create a general journal entry to reduce the use tax GL account(s) balance to zero. You could also query the general ledger to get the balance of the account as of a certain date. The balance field in GL accounts gives you the balance as of "now" which may include days' or weeks' worth of use taxes that aren't yet due.