February 27, 1997
MEMORANDUM No. NCAS-97-0046
TO: Fiscal Officers & Accounts Payable Supervisors
FROM:
Don Waugh
Assistant State Controller
SUBJECT: Variable Tax Rate Processing
Beginning on January 1, 1997, the General Assembly reduced the tax rate for most food items from 6% to 5%. Because some agencies, such as DOC and DHR, regularly purchase both food and non-food items from the same vendor on the same transaction, the current NCAS tax proration method will not always work. Therefore, beginning on March 1, 1997, the NCAS will employ a new method of prorating taxes on invoice lines.
The new tax proration method will utilize mini-chart indicators that calculate and prorate the total tax amount by designated rates. For example, a 600 mini-chart indicator will calculate the taxes at 6% of the line value, while a 500 mini-chart indicator will calculate taxes at 5%. The default value for all Paying Entities will be 6%. The new procedures also change the manner in which the county code is used to indicate a rate other than 6%. The instructions for utilizing the new tax proration method will appear Monday in the SIG under Processing Sales Tax in the Accounts Payable Policies and Procedures Section. It is very important that all accounts payable personnel be made aware of the new procedures immediately.
Because of the change in proration method, the sales tax by county report will have to be rewritten. While the code for the new report is being written, agencies must start using the new procedures, so that the new report can capture the variable rate taxes. When the revised report is completed, OSC will notify you.
Because we are already two months into 1997, we are implementing this change on short notice to try to capture variable tax rates as soon as possible. If you have any questions about the new tax recording procedures, please call the NCAS Client Support at 715-HELP.
DW/JM