POLICYANDPROCEDUREMANUAL

SOPNO:ACCTGAP0041215
DEPARTMENT: ACCOUNTINGSUBSECTION:ACCOUNTSPAYABLE
SUBJECT:
INVOICESALES&USETAXISSUEDATE:DECEMBER14,2015

POLICY:Hotelsareresponsibleforpayingsalesand/orusetaxonalltaxablepurchasesattherateapplicable
tothelocalityinwhichthepurchasesarebeingconsumed.

PROCEDURE:

Hotelsmustpaysalesorusetaxonthepurchasepriceofallitemsofequipmentincludingbeds,furniture,
televisions,roomfurnishings,etc.Theyarealsoresponsibleforsalesorusetaxonsuppliesfurnishedtoguests
orusedintheoperationofthehotel.Thesesuppliesincludeitemssuchaslinens,bedding,towels,soap,toilet
tissue,laundrybags,glasses,stationery,menus,keys,officesupplies,cleaningsupplies,etc.Rulesonusetax
mayvaryfromstatetostate*.ThepropertyDirectorofAccountingisresponsiblefortheaccurateaccrualof
usetaxinAccountsPayable.

1. InvoicesprocessedthroughAccountsPayableforgoodsthatwillnotberesoldshouldincludesalestax
chargedontheinvoiceoraccruedattheapplicablerateifsubjecttosalestaxforthelocationwhere
thegoodsareshippedandwillbeused,exceptwheretheitemisexemptfromsalestax(asinitem5).

2. Whereinvoicesaresubjecttosalestaxbutthevendorhasnotassessedthetax,usetaxwillbe
accruedonapplicableitems.Thisaccrualwillnotincreasetheamountoftheinvoice.Thisalso
includes:
Invoicesforgoodspurchasedoutsideofthecountyorstatewherethetaxratecharged
waslowerthanyourlocaljurisdiction.
Invoicesforgoodspurchasedoutsideofthecountyorstatewherenosalestaxwas
chargedatall.

3. Torecordusetax,theexpensewillincreasebytheunbilledtaxamountandanequivalentcreditwill
bepostedtotheUseTaxLiabilityaccount(AccruedUseTax22000045).Thistaxistypicallyassessed
atthesamerateasthesalestaxthatwouldhavebeenowed,hadthesamegoodsbeenpurchasedin
thestateofresidence.

EXAMPLE:
AninvoicehasbeenreceivedforfacialtissueandguestroomshampoofromGuestSupply.
Thetotaloftheinvoiceis362.25.
Yourlocaltaxrateforsalestaxis8.25%(Thisisanassumptioninthisexampleonly.Checkyourlocal
taxrate).
WeneedtoaccrueUseTaxonthisinvoice.

Calculation#1 362.25x8.25%=29.89
ThiscalculatestheUseTaxtobepaid

Calculation#2 362.25+29.89=392.14
Thiscalculatestheincreasedexpense

tobeincurred
InvoiceCoding:

4071860000 GuestSupplies
392.14IncreasedExpenseAmount

22000045
AccruedUseTax
(29.89) Taxenteredasacreditamount
TOTALINVOICE
362.25TotalInvoice$doesnotchange

4. Generallythefollowingitemsareexemptfromsalestaxuponpurchase:
Foodpurchasedforresaleorinternalconsumption
Alcoholicandcarbonatedbeveragespurchasedforresale
Retailgoodspurchasedforresale
Honorbaritemspurchasedforresale
Service/Laborportionsofinvoices

5. Certainitemsareexemptfromsalestaxuponpurchase,howeveraresubjecttoUseTaxwhen
consumedinternally,ratherthansoldinthenormalcourseofbusiness:
Alcoholicorcarbonatedbeveragespurchasedforresalebutusedforemployeeevents,in
houseentertainment,amenities,receptions,andothersalesandpromotionalevents.
Retailgoodspurchasedforresalebutgivenawayforemployeerelationsorsalesand
promotionalpurposes.
Honorbarnonfooditemspurchasedforresale,butgivenawayforemployeerelationsor
salesandpromotionalpurposes.

EXAMPLE:
Abottleofwinewaspurchasedfromyourliquordistributoratacostof$45.00.Notaxwas
chargedontheinvoice.
ThebottleofwinewasplacedintheroomofatopclientasanamenitybytheSalesDepartment.
Yourlocaltaxrateforsalestaxis8.25%(Thisisanassumptioninthisexampleonly.Checkyourlocal
taxrate).
WeneedtoaccrueUseTaxonthisitem.
Wealsoneedtocreditthebarforthecostofthewine,whilechargingSalesfortheexpense.

Calculation#1 45.00x8.25%=3.71

ThiscalculatestheUseTaxtobepaid

Calculation#2 45.00+3.71=48.71

Thiscalculatestheexpensetobe

chargedtoSales.
JournalEntry:

7270700000 CompServices&Gifts 48.71ExpenseAmountchargedtoSales

22000045
AccruedUseTax
(3.71) Taxenteredasacreditamount
13142030000 COSWine

(45.00)Credittooffsetexpenseofwine

Anyitemsconsumedinternallyorgivenasapromotionalexpenseneedtobetrackedon
adailyandmonthlybasissoproperUseTaxmaybeaccruedandpropercreditmaybe
giventotheappropriateexpenseaccountcode.
Note:ThisUseTaxwillautocalculateonthe2016Food&BeverageInventoryandCost
Calculationworksheetswhencreditsarelistedforgoodsconsumed.

*Arizonadoesnotimposeusetaxoncomplimentarypersonalhygieneitemsprovidedtoguests.Stateswithnosalestaximposedwill
alsohavenousetaximposed(AK,DE,MT,NH,OR).

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