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| *Loan,banking and credit>>>tax accounting |
Can we use cash method of accounting for reporting sales tax, but accrual method for financial books? |
Can we use cash method of accounting for reporting sales tax, but accrual method for financial books? The answer can be dependent on the jurisdictions involved. For US federal income tax reporting, the method used for sales tax reporting would not be important. For financial reporting, the materiality of the difference may be important and/or it may need to be included as a timing difference. Looking at it from the other way, most states have their own specific rules about reporting of sales and sales tax, these rules are normally are not affected by the accounting method used for income tax reporting or financial reporting. nope, revenue is realised when transaction takes place and not when cash is recieved. agree with James B. Needs to be accural for sales tax. Not sure if you can use different reporting methods for different taxes...however I know for a fact you can use cash method for sales tax (at least in Alabama) because I used to do books for a car salesman who financed his own customers. I researched sales tax here and found that it is perfectly legal for a company or individual to pay sales tax as he/she collects the money. My gut tells me however that whatever method you use to report your income to the IRS is your accounting method for everything. Sales tax is a tax on the actual SALE. The tax is assessed when the sale took place, whether you received the cash or not. |
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