TaxCloud: Automatic Sales Tax Payments (Details)

There are a couple things to consider before using TaxCloud to report and pay your sales tax. First, TaxCloud only will report sales tax on a cash basis. So, if you currently use an accrual method, you will have to transition to a cash method when you start using TaxCloud to report your sales tax. This can be difficult, but InflatableOffice has a couple reports you can use to make it easier. The transition in your accounting software can be very difficult too.

Transaction Dates

While you can manually add or import transactions if needed, they will appear in the month that the transaction was manually added regardless of the transaction date. For this reason, we suggest you use the date that you are entering the transaction as the transaction date. It will be easier to compare all your reports. You cannot manually enter tax exempt transactions. InflatableOffice will enter these for you, though. You cannot edit or remove a transaction through the TaxCloud interface. It must all be done through InflatableOffice. Changes will appear in the month of the transaction date, not in the month that the change is made.

Exemptions and Returns

If an exemption certificate is added to an event that already has payments on it, then those payments will be marked as returned and a new payment will be sent on the date the exemption form is added. If this happens on a different month than the original payment, then the money taking out of your bank account will be reduced by this returned amount, but the report in taxcloud showing the amount due will not indicate this. If you record a payment and then a refund of that payment in the same month, both will show in the InflatableOffice report. However, in the TaxCloud report, both will show on the same line.

Tax Rate Changes

TaxCloud keeps up with all tax rate changes so you do not have to. However, sometimes they are wrong or the state sends them the wrong information. The good news is that if the rate is low, TaxCloud assumes that liability so you don’t have to worry. If it is high, they will fix it and credit you. If you believe a rate is wrong, you can check the rate on TaxCloud here: https://taxcloud.net/find-a-rate/. Often wrong rates are due to address errors. Please contact TaxCloud through your account to resolve any of these issues.

It is possible for a lead to be given out to a customer and have the sales tax rate change by the time a payment is taken. In this scenario, you will have to either update the lead to get the new rate and then re-bill the customer or cover the positive or negative change without alerting the customer. This scenario is not really TaxCloud dependent. It can happen regardless of the method you are using to report and file sales tax. If you see discrepancy between amounts and rates, please check to see if the rate has changed before assuming it is a bug.

Penny Differences

You will have instances where rounding will cause penny differences between your InflatableOffice report and your TaxCloud report. You can safely ignore these.

Entering a Transaction in TaxCloud Manually

We suggest using the default invoice number and date. For the shipping or billing address, it is a good idea to use the lead ID for the first line, but remember, what you put here has to be unique. So, if you enter another transaction for the same lead, you must add something to make it unique such as 123456_1. It is suggested that you enter only one line item. You may name it whatever you would like. Subtotal is a good way to name it. Remember when you enter the price, it must be the before tax amount. The before tax amount equals the after tax amount divided by one plus the tax rate ( ex. $100 transaction at 6.5% = 100/1.065 = $93.90. Finally, click the calculate button before clicking OK.

Transitioning from Accrual to Cash Reporting of Sales Tax

There are 3 conditions we have to check for:

  1. Manual Entry: Payments that have been accepted for future events. These will need manually entered because sales tax has not been paid for them yet.
  2. Automatic Entry: Payments accepted during the TaxCloud reporting month that sales tax has not been paid for. These will be included in the TaxCloud report.
  3. Manual Removal: Payments accepted during the TaxCloud reporting month that sales tax has been paid for. These will be included in the TaxCloud report and must be removed or you will be paying the sales tax twice.

Manual Entry

Any transactions you have completed for events that occur after the date you start using TaxCloud and the cash reporting method must be manually entered into TaxCloud if you haven’t paid tax on them yet. We recommend doing this for your first TaxCloud report. This will be the only time you need to do this. To generate this report, you need to set the event date range filter to the date you start using TaxCloud through a date far into the future enough to catch every event that you have on your books in the future. You also need to set the payment date range in more filters to a date far in the past up to the day before you started using TaxCloud reporting. You need to manually enter any payment transaction that shows in this filtered lead list. You will only need to do this once, and you can safely ignore any tax exempt payments because you cannot manually enter an exempt payment. We recommend entering these transactions only after those events have taken place and you are sure there will not be any refunds of these payments. We suggest you keep this list handy and cross off items once you’ve entered them into TaxCloud or dealt with them appropriately.

Automatic Entry

This is an important step as you learn to trust TaxCloud reporting or if you simply want to verify that it is working as you would expect. Follow the instructions below on InflatableOffice to generate a report for these transactions. Anytime you enter a credit or refund, these will show as only one transaction on the TaxCloud website and will be the sum of the payment minus the refund (totalling zero when it is a full return).

  1. Go to the leads page.
  2. Choose the appropriate payment date range from the more filters dialog box.
  3. Click the date column to sort by the event date.
  4. Click the reports button.
  5. Select the “TaxCloud” report.
  6. Click View.

On the TaxCloud site, go to the transactions tab and set your date accordingly to compare with the above generated InflatableOffice report.

Manual Removal

There may be some transactions that you already paid sales tax for but have not been paid for yet. Once you switch to TaxCloud and take those payments, TaxCloud will require you to pay sales tax on those items, not knowing that you already have. So, you will have to manually remove them from TaxCloud. To generate a report of the transactions you have already paid sales tax for and will need to manually submit to be removed from TaxCloud, follow the below instructions.

  1. Go to the leads page.
  2. Set the event date range sufficiently in the past up to the day before you switched to TaxCloud.
  3. Set the payment date range to the TaxCloud reporting period.
  4. Uncheck any status for a lead that should not be in the report.
  5. Click the date column to sort by the event date.
  6. Click the reports button.
  7. Select the “Monthly Sales Tax” report.
  8. Click View.

To manually remove a payment that was sent to Taxcloud:

  1. Go to the Lead’s Log tab
  2. There will be entries that say Taxcloud Processed
  3. Click the Return? link next to the ones you want returned.
  4. It can take up to 1 hour for Taxcloud to be updated.
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