University of California, San Diego


December 14, 2000


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:


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.


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%.

Credit Memos
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.

Express Card
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
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.

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:

Rate Code Rule Account Detail
7.5% Sales of tangible personal property delivered within San Diego County. 215513-69997A TX___1
7% Sales of tangible personal property delivered by common carrier to California locations outside San Diego County. 215515-69997A TX___2

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 contact:

Purchasing..............Linda Collins, x-43082, lcollins@ucsd.edu
Invoices................Alicia Cole, x-40541, acole@ucsd.edu
Payment Authorization...Robin Posner, x-40859, rposner@ucsd.edu
Payment Authorization...Dona Napier, x-40815, dnapier@ucsd.edu
Express Order...........Melinda Louret, x-40840, mlouret@ucsd.edu
Express Order...........Charlotte Collier, x-45763, ccollier@ucsd.edu
Sales Activities........Laurie Martin, x-44562, llmartin@ucsd.edu

                                                Donald A. Larson
                                                Controller and
                                                Assistant Vice Chancellor -
                                                Business and Financial Services