How to Fill out your State Sales Tax form using Revenue by Salestax report.

How to Fill out your State Sales Tax form using Revenue by Salestax report.

Each State Sales Tax reporting form is unique for each of the 50 states and territories. But each asks for basically the same information.

First you have to understand what is happening when we submit a Sales Tax report to most tax authorities. We submit what our sales were for the period and from that net amount we are assessed a sales tax amount. Since most sales tax authorities expect us to pay the tax regardless of whether we have collected the sales tax, you will normally write a check to the state for this assessment.

In the DME industry, unlike any other industry, we have the contractual allowable amount to contend with. Which simply means that we submit a bill for $100 and we get an EOMB for $72 (80% of the allowable amount) $90. At that time we will “write off” $10, the difference between the $100 we submitted and the $90 that was allowed. Of course the allowable amount is assumed to include whatever sales tax is due, so some part of that non-allowed amount $10 is sales tax, so we need to recoup this money.

To report our net sales for a period, we need to do the following:

Example: Your state sales tax rate is 8.25%, submitted charges for the month is $75,000, your non-allowed amount charged off is $10,000 and your adjustments are $2,000.

Net sales: $69,284.06 or $75,000 / (1 + 0.0825)

Bad Debt: $11,085.45 or $12,000 / (1 + 0.0825)

This calculation simply removes the sales tax component from the gross sales (submitted charges) and returns/bad debt to allow you to report them correctly to your state. If you are reporting the submitted charges, then you are paying sales tax on the sales tax amount and that’s bad.

Note: If your Tax Authority allows you to pay sales tax based on the amount you collect, use the payments amount instead of the submitted and other amounts.