OFFICE OF THE ASSISTANT VICE CHANCELLOR -
BUSINESS AND FINANCIAL SERVICES
December 14, 2000
KEY ADMINISTRATORS/KEY SUPPORT STAFF
SUBJECT: 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
On January 1, 2001, the California sales and use tax rate for San Diego
County will decrease from 7.75% to 7.5%. The decrease is the result of
1991 legislation that requires a one-quarter percent tax reduction if
State financial reserves exceed a certain level.
The new tax rate will apply to 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 purchaser and as a seller:
UCSD PURCHASE ORDERS
All UCSD purchase orders for taxable tangible personal property (goods),
rentals and certain specific services placed on or after January 1,
2001, will be subject to the new 7.5% rate.
UCSD PAYMENT OF VENDOR INVOICES
Payments Subject to California Sales or Use Tax
The tax rate which applies to a purchase is based on the date that the
goods were delivered. Most invoices do not reflect the delivery date,
therefore, the following rules will apply when the tax rate is reduced
from 7.75% to 7.5% on January 1, 2001:
General Practice for Paying Invoices
All taxable invoices dated January 1, 2001 and thereafter will be paid
reflecting the new tax rate of 7.5%. Invoices received in January, 2001
and dated in the year 2000 or before will be paid at the old rate of
7.75%. Other than the new rate, there will be no change to the posting
of sales or use tax amounts to the IFIS Operating Ledger.
For IFIS users, the existing tax codes 001 representing sales tax and
008 representing use tax, will be changed to reflect the 7.5% rate
effective January 1, 2001. New tax codes 030 for sales tax and 031 for
use tax, will be established to represent the old rate of 7.75%.
Sales and use tax taken on credit memos will be applied at the rate paid
on the original invoice.
Payment Authorization and Payment Requests
Preparers should be cognizant of when the goods were delivered to ensure
that the applicable rate is reflected on the submission of either a
Payment Authorization or a Payment Request. Please refer to the contact
list below if there are any questions on this subject.
For purchases January 1, 2001, and thereafter, Express Card users should
review their statements and supporting documentation to determine if tax
was applied by the vendor at the new rate. If an adjustment needs to be
made, complete an Express Card Use Tax Accrual form on the web. This
form can be accessed at http://www-bfs.ucsd.edu/epic/EC-Tax.htm. In
addition to completing the form, please add an explanation in the text
box indicating that a tax adjustment based on the new rate is being
requested. The request will be acknowledged by an email message and the
adjustment will appear as a use tax credit in the IFIS Operating Ledger.
Express Card users should also review credits to ensure that credits for
purchases made prior to January 1 have the correct amount of tax applied
by the vendor. If adjustments need to be made, please follow the above
procedures applicable to Express Card purchases.
Express Order vendors have been contacted and advised to apply the new
rate. The electronic transmissions will be reviewed prior to payment to
ensure that the rate is the new one. However, you should ensure that
credits for purchases prior to January 1 are credited back at the rate
originally charged. If you need assistance with credits or have any
questions, please refer to the contact list below.
UCSD AS A SELLER
January 1, 2001 and thereafter, UCSD departments and units selling
taxable goods that are delivered within San Diego County should apply
the new 7.5% sales tax rate. The sales tax rate for goods delivered by
common carrier (U.S. Postal Service, Fed Ex, etc.) to California
locations outside San Diego County will decrease from 7.25% to 7%.
Goods delivered out-of-state are not subject to California sales tax.
To meet sales tax reporting requirements, it is important 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:
||Sales of tangible personal property delivered within San Diego County.
||Sales of tangible personal property delivered by common carrier to California locations outside San Diego County.
Tax detail codes have 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 7.5% sale made by the Biology department
would be TXBIO1. The sales tax amount must be calculated and entered on
the ISIS invoice.
For additional information regarding the new tax rate(s), please
Purchasing..............Linda Collins, x-43082, firstname.lastname@example.org
Invoices................Alicia Cole, x-40541, email@example.com
Payment Authorization...Robin Posner, x-40859, firstname.lastname@example.org
Payment Authorization...Dona Napier, x-40815, email@example.com
Express Order...........Melinda Louret, x-40840, firstname.lastname@example.org
Express Order...........Charlotte Collier, x-45763, email@example.com
Sales Activities........Laurie Martin, x-44562, firstname.lastname@example.org
Donald A. Larson
Assistant Vice Chancellor -
Business and Financial Services