Reporting Kansas Sales Tax

Jul 29, 2013

How do you report Kansas sales tax when you have collected sales at the old and new rates during a month? This is a timely issue with the recent news of the Kansas sales tax changes. It can get a little confusing when you are collecting for different tax rates, so the below steps should help you work through that process.

In order to report t
he combined sales tax rates collected during a month you will need to back into a "calculated taxable sales total." This is used to get to the actual tax collected amount. For instance, if you collected $1,205.00 in sales tax during July (some with the new rates and some with the old ), you would take $1,205.00 (tax collected total) / (new tax rate) - you will need to use your actual sales tax rates for your jurisdictions - to get the "calculated taxable sales" that needs entered on the sales tax return. The difference between your actual taxable sales and this "calculated taxable sales" should be entered on the "Merchandise consumed" line of the sales tax return.

If you have QuickBooks, here are the instructions for sales tax setup of the new rate:

1. Add the new Sales Tax Item to the Item List (Lists > Item List).

  • The Item Name will have to be different than what you are currently using. Consider putting the sales tax % on the Item Name. An example is "Sales Tax-KS (8.75%)".
  • This can be done in advance of the date your sales tax will change.
  • If you use more than one sales tax item, be sure to add them all in.
  • You cannot delete or change the rate on your existing Sales Tax Items because you need the Item to properly calculate your sales tax return.

2. Change your Sales Tax Preferences to use the new Item.

  • Go to Edit > Preferences > Sales Tax > Company Preferences tab.
  • When you create any sale (Invoice, Sales Receipt) or credit memo, this Sales Tax Item will now be used as the default.
  • This can be done in advance of the date your sales tax will change ONLY if you will remember to change the Sales Tax Item on any sale. If you won't, write a reminder to yourself to change this on the date the sales tax rate is effective.

3. Make the old Sales Tax Item inactive on the Item List.

  • Go to the Item List. Double click the old Sales Tax item and click the box 'Item is Inactive'.
  • Do this on the date the new Sales tax is effective!
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