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PREPARING A FLEXCARD USE TAX FINANCIAL JOURNAL

A. REMOVING OVERPAID USE TAX A transaction with an out-of-state merchant may post to the General Ledger with a Use Tax overpayment, either because Use Tax was not corrected when the transaction was reviewed or because an unreviewed transaction automatically posted after 14 days.

In the following example, the full amount of the Use Tax, $85.46, was not removed from the transaction when it passed, unreviewed, to the general ledgers 14 days after being received in the Allocation Module.

In other cases, you may only be removing part of the Use Tax, for example, when shipping charges, or non-taxable service charges, were included as part of the charge by the merchant. In these cases, you will need to calculate the amount of the Use Tax reversal on just the non-taxable portion of the charge. 1. Open the FlexCard Use Tax Financial Journal and save it to your computer.

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2. Complete the journal as follows.

a. On the first line of the journal, do not change the Statement Line Description (CA USE TAX).

b. Replace the XXXX in the Description of Transaction field with your Financial Department Code – in this case, BUSS.

c. Enter the amount of the Use Tax overpayment in the Debit column of the line (Cell K6) – in this case, 85.46.

d. On the second line of the journal, overwrite YOUR DEPARTMENT CODE with your actual Financial Department Code – in this case, BUSS

e. Enter your department account information, including the object code.

f. Replace the XXXX in the Description of Transaction field with the merchant name (or a portion of it: you cannot enter more than 18 characters into the cell or an error message will appear; your entry will not be accepted until changed.

g. Enter the amount of the Use Tax overpayment in the Credit column of the line (Cell L7) – in this case, 85.46. The debit and credit amounts must be the same.

h. Enter the current date into shaded cell O6, in format MMDDDYY – in this case, 051917

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Once this date is entered, it will fill down in all cells below it, and update the Journal Month / Year and other references on the journal. All these cells have been protected and you cannot enter any values into them.

NOTE: You cannot delete unused rows from the journal because they contain protected cells. i. Update the EXPLANATION as appropriate, providing any pertinent details.

j. In the gray-shaded area at the bottom of the form, check either the “Complete Use Tax Reversal” box or the “Partial Use Tax Reversal” box, as appropriate.

k. In the blue shaded area immediately below, check the box next to the appropriate reason code – in this case, because the Transaction amount includes CA Sales Tax.

l. If appropriate, on the department account line, enter further identifying information related to the department LAFSO credit in the following fields:

i. FlexCard Purchase Order Number: enter the first six characters (F00000) in the Ref. or Req. field, and the last six characters – in this case, 011897, in the Dpt. Dash field.

ii. Cost Center

iii. Cost Type

iv. Project Code

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3. When the journal is complete, print it and obtain the appropriate department signature on the “Prepared By” line, with telephone extension and date.

4. Prepare the backup documentation, consisting of:

a. A printout of the Allocation Module, highlighting the transaction row and circling the Use Tax amount that is being reversed.

NOTE: If the Allocator had removed the Use Tax, but the Reviewer did not approve the transaction in time and it went over to the general ledger with the Use Tax restored, note this fact on the printout – FlexCard Administration can verify the facts.

b. Documentation showing why the Use Tax was not owed, generally in the form of an invoice or other documentation from the vendor: a non-taxable service (cellphone service, for

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example), shipping charges, or the payment of Sales Tax as part of the original charge – as in this case, as shown on the merchant’s invoice.

5. Send an email to flexcard@bfs.ucsb.edu with two attachments:

a. The Excel journal (so it does not have to be recreated), and

b. A PDF document consisting of the signed journal and all backup documentation. 6. Retain the original copy of the journal and documentation for your department records. DO NOT

SEND IT TO BUSINESS & FINANCIAL SERVICES. If you do so, you run the risk of it being misrouted and possibly duplicated.

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B. ADDING UNDERPAID USE TAX A transaction with an out-of-state merchant may post to the General Ledger with a (Use) Tax underpayment for two reasons:

1. The merchant does not charge sales tax, but payment is via a Paypal processor with a California address: the Allocation Module does not add use tax to merchants identified as being from CA.

2. The merchant charges sales tax, but the tax rate is too low: once the Allocation Module sees an amount in the Sales Tax field, it does not allow use tax adjustments – this situation occurs even if the merchant enters a random figure – such as “1” – i.e., $0.01, in the Sales Tax field.

The solution is to prepare a FlexCard Use Tax Reversal Financial Journal, reversing the debits and credits so your department account is charged the underpaid use tax and a credit is placed in the campus use tax balance sheet account.

The procedure is exactly as the one outlined for reversing Use Tax, except for the reversal of the debits and credits. One of these journals would appear as follows:

Submit the journal exactly as you would one where you were removing use tax, via an email to flexcard@bfs.ucsb.edu with two attachments:

a. The Excel journal (so it does not have to be recreated), and

b. A PDF document consisting of the signed journal and all backup documentation. Retain the original copy of the journal and documentation for your department records. DO NOT SEND IT TO BUSINESS & FINANCIAL SERVICES.