Billing for Sales Sourced to Washington State (WA)

Washington State Sales Tax

Sales of goods and services to individuals, groups, or external entities may be sourced to WA. The sales tax on individual line items needs to be accounted for and collected from those customers.

  • Determine tax rate and location code: Before entering a bill into the Enterprise Financial System (EFS) that is sourced to WA, a determination of taxability for each line item needs to be made along with the tax rate and location code.
  • Billing procedure for collecting WA sales tax: When entering a bill with WA sales tax, there is additional information that needs to be recorded to collect sales tax from the customer. An emphasis needs to be on the Ship To and Ship Loc fields, recording the tax rate, tax amount, and location code.

Determine Tax Rate and Location Code

Complete these steps before entering a bill into EFS to determine the tax rate and location code.

  1. Identify the item or service being sold.
  2. Consult Job Aid: Sourcing Transactions for Sales Tax (pdf) to apply sourcing rules to determine ship to state. This job aid is on the Tax Management Office website > TMOGs & Other Resources > Job aid for Sourcing Transactions for Sales Tax.
  3. Determine whether the customer is exempt from paying sales tax in the state of Washington (WA). Does the customer have a Washington tax exemption certificate on file or do they have one to submit? Each state has its own tax exemption rules. If there is no tax exemption certificate on file, the University needs to collect sales tax. The best practice is to ask the customer if they are exempt from paying sales tax.
    • Send any newly submitted tax certificates to Accounts Receivable Services via UM Maintain Customer Request.
    • If the customer is exempt from paying sales tax in the state of WA, skip steps 4-5 and proceed to enter the bill.
    • If there is no tax exemption certificate on file, continue with steps 4-5 to determine the sales tax that will be added to the bill.
  4. Determine the taxability of the good/service sourced to WA. Consult the Tax Management Office ([email protected]) to determine if the good or service being provided is subject to sales tax in the state of WA.
  5. Go to Washington State Tax Rate Lookup to determine tax rate and jurisdiction (check at least quarterly).
    1. Enter Street Address, City, ZIP, and Taxable Amount.
    2. Click Search.
    3. Scroll down the page to view results.
    4. Note 4-digit Location code, Total tax rate, Tax due, and Total due. This information will be entered into EFS.
Washington sales tax lookup form.

Washington Tax Rate Lookup

Washington sales tax rate lookup results.

Washington Sales Tax Lookup Results

Billing Procedure for Collecting WA Sales Tax

Follow these steps to create an EFS invoice containing goods/services to collect WA sales tax.   Note: Steps 5 and 11 are new/updated.

  1. Navigate to: Billing > Maintain Bills > Standard Billing > Add a New Value
  2. Add a New Value tab:
    1. Business Unit = UMN01.
    2. Bill Type Identifier = 001 – Standard – Non Sponsored.
    3. Bill Source = Your college/cluster code.
    4. Customer = Customer ID.
  3. Header – Info 1 page:
    1. Verify Invoice Form, Bill Inquiry Phone, and Billing Specialist. Update as needed.
    2. Click Next.
  4. Address Info page:
    1. Verify Attention To (contact) and Bill-To Location. If incorrect, select correct values.
    2. Click Next.
  5. Header – Order Info page:
    1. Enter PO Ref, Contract, Order No, and Order Date if applicable.
    2. Enter ship-to customer ID in Ship To and ship-to location in Ship Loc. The values entered in these fields should answer the question, “Where did the sale occur?” To determine where the sale occurred, consult Job Aid – Sourcing Transactions for Sales Tax (pdf). If goods are picked up from or services performed at a University location, use Ship To Customer UMN0001 and the location corresponding to the University campus or office.
    3. Click Next.
  6. Header – Note page:
    1. Enter header notes as needed.
    2. Click Next.
  7. Line – Info 1 page:
    1. Select Identifier (charge code). Use a specific identifier or charge code for the goods/services being sold. This assists with data entry, clarifies what is being sold, and aids with reporting.
    2. Update Description.
    3. Enter Qty.
    4. Enter Unit Price.
    5. Click Next.
  8. Line – Note page:
    1. Enter line notes as needed to fully describe the goods or services.
    2. Click Next.
  9. Revenue Distribution page:
    1. Enter Fund associated with the activity.
    2. Enter DeptID associated with the activity.
    3. Enter Program associated with the activity.
    4. Leave Project blank.
    5. Enter Account associated with the activity.
    6. Enter FinEmplID as required.
    7. Enter ChartField 1 as required.
    8. Enter ChartField 2 as required.
    9. Amount populates automatically.
    10. Disregard all other fields.
    11. Click Next.
  10. Repeat steps 7-9 for each additional bill line.
  11. Enter one additional bill line to account for the sales tax.

    1. Line – Info 1 page:

      Bill Line page highlighting Identifier, Description, Quantity, and Unity Price fields.
      1. Identifier (charge code) = 000-SALES_TAX_WA.
      2. Description = WA State & Local Tax ##.##% (replace ##.##% with the tax percent to be charged).
      3. Quantity = 1.
      4. Unit Price = Total tax amount for all taxable lines on order.
      5. Click Next.

    2. Line – Note page:

      Bill Line Note section highlighting "Internal Only Flag" checked box and Note Text field with "Location Code: 1726."
      1. Enter 4-digit location code as an internal only note using the following format: Location Code: ####
      2. Click Next.
    3. Revenue Distribution page:
      1. The ChartField string for the ‘WA State & Local Tax’ Identifier will pre-populate. DO NOT CHANGE.
      2. Click Next.
  12. Header – Info 1 page:
    1. Change Status to RDY.
    2. Click Save.