Sales tax reimbursements to units

[alan.richardson]

I could probably get a more direct answer contacting HQ, but the depth of the forum's members will probably find us an answer faster and with less burden to the paid folk. That disclaimer aside, I ran into a question while executing a local unit audit today which while not specifically an audit exception, made the clerk and I wonder if the process was being done correctly.

The unit is in North Carolina, one of the two states that require merchants to collect sales tax on unit purchases The Church reimburses the unit by forcing a split category to introduce a line entry for the sales tax (which to 'reimburse' the unit is not deducted from the budget expenditure).

Our question was on the category title assigned by the Church in MLS - UTAH SALES TAX REIMBURSEMENT. Does this somehow cause the church to communicate incorrect information to the Utah taxing authorities? At least one other unit in our stake (which is actually centered in Virginia, a nontax required state that collects taxes unless an exemption is presented) has the same issue, MLS is set up to accumulate UTAH sales tax amounts. Previous versions (pre-CUBS?) I believe allowed the units to select their tax setup.

Programming problem? Non-issue?

And what of the scenario where the member makes the purchase in Virginia, without presenting the sales tax exemption certificate, should the Virginia tax be listed? (I don't think so; THAT should come from the unit's budget because they could have had the option to have the tax not collected, although obtaining that certification is somewhat difficult, but not impossible. IMHO only.).

Thoughts welcome. Thanks all.

[aebrown]

Our question was on the category title assigned by the Church in MLS - UTAH SALES TAX REIMBURSEMENT. Does this somehow cause the church to communicate incorrect information to the Utah taxing authorities?

I don't know the answer. It certainly seems odd that a unit in North Carolina would select a Utah Sales Tax Reimbursement category. If it were intended to be a generic category, independent of which state you are in, it seems that it would have been named something like "Sales Tax Reimbursement." You didn't mention whether there are units in your stake that actually have a "North Carolina Sales Tax Reimbursement" category. If there are, then it seems clear that this is a problem. Will it cause sales tax funds to go to Utah instead of North Carolina? I would call CHQ to ask that question and get their help in fixing the category name.

And what of the scenario where the member makes the purchase in Virginia, without presenting the sales tax exemption certificate, should the Virginia tax be listed? (I don't think so; THAT should come from the unit's budget because they could have had the option to have the tax not collected, although obtaining that certification is somewhat difficult, but not impossible. IMHO only.).

The answer to that is clear. You can't use the Sales Tax Reimbursement category in any state for which it is not authorized. If you do, then what happens to those amounts designated as Sales Tax? The Church can't submit those to the state of Virginia for reimbursement, because the Church has no such arrangement with that state. And to submit those amounts to any other state would be fraudulent. And the final option in question is whether a person who buys items and pays sales tax in Virginia should not be reimbursed for the sales tax portion. In my opinion, they need to be reimbursed for their actual expenses incurred, including sales tax (even if there may have been a way to avoid paying that tax). Then the ward leadership may want to train them in the procedures for getting the sales tax exemption so that some budget funds can be saved in the future.

[alan.richardson]

There is only the one category available, although we didn't try to make up one of our own. It was preconfigired. I agree with your statement about Virginia tax. Maybe the Wiki needs to be updated to state sales tax collected in NC and UT, not all sales taxes paid by those units. Thanks.