OFFICE OF THE ASSISTANT VICE CHANCELLOR
-
BUSINESS AND FINANCIAL SERVICES
March 28, 1994
KEY ADMINISTRATORS/KEY SUPPORT STAFF
SUBJECT: San Diego County Sales and Use Tax Decrease
Reference: PPM 300-23, State Sales Tax - The University as a Seller
PPM 523-2.3.2, Applicability of State Sales Tax to
Purchases of Goods and Services
The California Supreme Court ruled that the San Diego County
Justice
tax is unconstitutional and has ordered a refund of collected
monies. Beginning April 1, 1994, the state sales and use tax rate
for San Diego county will decrease from 7 3/4 % to 7 %. San Diego
county retailers have been ordered to lower the sales taxes being
collected by three-quarters of a percent from 7 3/4 % to 7 %.
The new tax rate will apply to University of California, San Diego
(UCSD) purchases and sales subject to state sales or use tax. The
following is a summary of guidelines that will affect UCSD as both
a
buyer and as a seller:
PURCHASING
All purchase orders written by UCSD placed on or after April 1,
1994
will be subject to the 7 % tax rate. Departments should continue
to
use tax code "001" on taxable purchase orders. The IFIS tax rate
tables will be changed effective April 1, 1994 to reflect the
revised tax rate for all high value and low value purchase orders
processed.
The tax regulation also states that the applicable tax rate is the
rate in effect at the time goods or services are delivered. Due to
this regulation, departments should carefully scrutinize invoices
received to ensure that the correct tax rate is applied to the
payment amount of the invoice. This may result in a reduction to
the tax amount on the invoice and the original purchase order.
Purchase orders for item(s) purchased for resale and for item(s)
which are nontaxable are exempt from the application of state sales
or use tax and should reflect tax code "000".
INVOICES
Payment of invoices for taxable purchases dated April 1, 1994 and
thereafter will be processed reflecting 7 % sales or use tax. The
tax amount will reflect in the Operating Ledger either as a sales
tax or as a use tax.
Invoices issued by vendors residing outside San Diego County that
do
not reflect the proper San Diego County sales tax rate will be
processed with the new tax rate of 7 %. The Operating Ledger will
reflect the sales tax which was included in the invoice and
remitted
to the vendor and it will also reflect the applicable incremental
amount accrued as use tax. For invoices for taxable purchases
issued by vendors residing outside San Diego County which do not
reflect any sales tax, the Operating Ledger will reflect the use
tax
of 7 % as a separate line item.
Invoices for taxable purchases issued by vendors residing within
San
Diego County will be processed for payment including the 7 % sales
tax amount. The Operating Ledger will reflect the 7 % sales tax
remitted to the vendor.
SALES ACTIVITIES
Activities performing cashiering functions and those departments
preparing University invoices for which sales tax is applicable
will
be impacted by the decrease in the sales tax rate. Please note
that
this decrease applies only to the sale of goods delivered within
San
Diego County. There is no accounting change for the sale of goods
delivered to areas outside the County of San Diego.
To meet sales tax reporting requirements, it is imperative that
sales tax be recorded at the proper amount and in the proper
account. Rules for applying the two sales tax rates and the
related
general ledger accounts and/or ISIS accounts receivable/cashiering
system detail codes that must be used for accounting are as
follows:
Rate Rule Account/(Detail
Code)
1 2
7 % Sales of tangible personal property 215513 (TX___1)
delivered within San Diego County.
1
7 1/4 % Sales of tangible personal property 215515 (TX___2)
delivered by common carrier to
California locations outside San
Diego County.
NOTE: 69997A is the correct fund to use with either sales tax
account.
1
Tax detail codes are comprised of the letters TX followed by a
three
(3) letter code identifying the department, then a 1 or 2 as
described
above. For example, the detail code for a 7 % sale made by the
Biology
department would be TXBIO1.
2
In preparing invoices for sales delivered within San Diego County,
please calculate the sales tax at 7 % to enter on the invoice. The
detail code (TX---1) will remain the same.
As before, for sales of goods delivered to California locations
outside San Diego County, the 7 1/4 % rate applies regardless of
the
destination county's tax rate, and sales of goods delivered
out-of-state are not subject to California State Sales Tax. Upon
request, the Accounting Office will provide copies of the 7 1/4 %
and 7 % tax rate schedules and a listing of the cities within San
Diego County.
For additional information regarding the application, payment, and
collection of the new tax rate, please contact:
Purchasing......................x44436 - Roy Brown
Invoices........................x40541 - Alicia Cole
Sales Activities................x44951 - Jonathan Kim
Donald Larson
Assistant Vice Chancellor -
Business and Financial Services