USA - Managing Sales Tax with Telecom Taxes in Datagate

Recommendation

If you handle your own Sales Tax filing or reporting using reports such as Sales Tax reports from QuickBooks, you’ll also need to include the Sales Tax calculated by Datagate and your Tax Engine. The total Sales Tax payable will be the sum of the Sales Tax from your accounting system (QuickBooks, Xero etc) and the Sales Tax calculated by Datagate.

Steps to Calculate Your Total Sales Tax:

1. Generate your usual Sales Tax reports from your accounting system (e.g., QuickBooks).
2. Access the tax report for Telecom taxes from Datagate (or from Suretax, Ceretax, or Avalara portals).
3. Filter the Telecom Taxes report to extract only the Sales Tax.
4. Add the Sales Tax from your accounting system to the Sales Tax from the Telecom taxes report. This will give you the total Sales Tax you owe.

Questions and Answers

This example uses QuickBooks, but the same process applies to other accounting systems and PSAs.

1. What should we map Datagate-calculated Sales Taxes to?

   Quickbooks - You should map the taxes to a product that links to a Liability General Ledger (GL) account. Do not map the product to QuickBooks' default Sales Tax GL account, as QuickBooks will reject this. Xero or other accounting systems - Choose a liability GL account.

2. Can I export all Datagate-calculated taxes to the same product or GL account?

   Yes, you can. While it might simplify reconciliation if Sales Tax has its own GL account, this is not required.

3. Why can't I let my Accounting System calculate the Sales Tax?

   Calculating Sales Tax for Telecom taxes can be complex. For example, in some cases, Sales Tax is calculated on top of other taxes ("Tax on Tax"). QuickBooks isn't designed to handle these detailed rules for Telecom taxes, but the tax engines used by Datagate are equipped to perform these calculations accurately.

   Example: If the Sales Tax rate is 4% and the amount is $300, the tax may be more than $12 due to the "Tax on Tax" rule.