Invoicing for Arkansas sales tax

[jcaroland]

Help! Someone out there in Arkansas (or sells in Arkansas) who is familiar with this?

We are out-of-state vendor, selling high-price ticket ($40K + s/h) item to Arkansas biotech client.

Our accountant said we were establishing sufficient nexus in Arkansas to comply with sales/use tax requirements. We have registered with Sales Tax Division, and they have sent us all the documentation.

If I understand this correctly, we collect 6% state sales tax on the purchased item plus s/h, but we also collect city and county % limited (different per city/county) to $2500 max for the sale for such an invoice.

How do I set up a tax item to handle the % to charge on $2500 for the city and for the county, and is it possible to create a tax group to reflect these diverse tax collections? Even our accountant wasn't sure how to handle this one.

Any help is very much appreciated.

[bjmilleria]

Unfortunately, it doesn't look like QB will handle this sales tax automatically. Hopefully, at these prices, you won't mind having to manually enter sales taxes this time.

For the sales tax item at the bottom of the invoice, use Out-of-state or some other 0% item. Then enter the different sales taxes that apply as items on the main area of the invoice. If you use a Subtotal item after your regular items, Arkansas state sales tax should be calculated correctly. The other tax items won't come out correctly, but they weren't going to anyway. After choosing the city/county items on a separate line, you will have to manually calculate the amounts, and manually enter them in the amount column rather than accepting the number QB comes up with. Just make sure to have the different items and tax agencies set up before you make the invoice, and this is probably the best you can do.

[jcaroland]

Thanks so much for the quick reply! I appreciate the input. Yesterday evening I set up the invoice (with sales tax item created for AR state sales tax and sales tax vendor) for the state 6% sales tax on the total sale, and added the other two tax amounts as item entries. However, since this will probably be the only big-ticket sale we make in Arkansas for a long time (most of our clients are in Maryland and California), I set up another sales tax item to reflect the actual percentage of what the total tax liability (state + city + county) would be, and included text info under the shipping detail. Of course, I will only be able to use this one time, as the tax was based on costs that would be variable over time. If I miscalculated the tax and the amount is corrected by our client, the adjustment will be easier to correct, I would think.

When it is time to pay State of Arkansas, since this is the only sale that will show up, it won't be that difficult to break down the taxing entities and how much they each get. One check goes to the state tax division for everything.

Considering the threads I have seen on this particular problem, and it looks to be multi-state, I am surprised that QuickBooks hasn't addressed this. Seems that it could be solved by having sales tax item set up to accept tax percentage OR $$ amount, or even an item that could post to a liability account. That would have solved my dilemma very easily.

Again, thanks so much for the help; so much appreciated!