Trans Cost Remit Tax

The Trans Cost Remit Tax Report calculates the tax on the transportation (delivery) cost and the tax that must be remitted to the state. The transportation cost is the cost of delivering the paper (the credit to the carrier) and in some states this may be excluded from tax. This report is available only if the Remit On Payment add-on has been purchased.

Note:

• This report is appropriate for states, such as Florida, that require taxes to be remitted on payment rather than on delivery. For remit-on-delivery states, the Tax Liability Report, above, should be run instead.

• A subsidy amount can be added to the transportation cost, based on the Business Rule— “What is the daily subsidy amount which should be added to the remit on payment trans cost calculation?” (Transportation Cost section) or, if defined at the route level, the Route Subsidy field in the Route Setup Utility.

In addition to reporting taxes, the Trans Cost Remit Tax Report updates the General Ledger with tax revenue amounts; the Tax Collection account is debited and Subscriber Revenue credited for taxes that are excluded due to transportation cost. Note that this report does not list mail subscribers.

To run the report:

• Select Trans Cost Remit Tax from the Taxing menu to display the Trans Cost Remit Tax window.

  
• Click Add and complete the following fields.

  Field	Type	What to enter
  PRODUCT	setup	Enter the product for which to report tax exclusion and remittance. Enter “*” to multi-select products.
  START DATE, END DATE	date	Enter the date range for running the Trans Cost Remit Tax report. The report lists taxes on papers delivered within this date range.
  CHECK SUSPENDED PMTS	yes/no	Select this checkbox if you want the process to check for suspended payment batches. If a suspended payment batch is found for the product and date range, the message “Found suspended payment batch: <batch ID>” will be displayed.
  CHECK UNPROC TRANS	yes/no	Select this checkbox if you want the process to check for unprocessed transactions. If an unprocessed transaction is found for the product and date range, the message “Found an unprocessed <tran type ID> for <subscriber ID> on <tran date>”.
  UPDATE GL	yes/no	Indicate whether the General Ledger should be updated with tax revenue amounts as part of the report process.

• Click OK and then Continue to create the report and update the GL.

Calculating the Remit Tax and Tax Revenue Amounts

The formula used by Circulation to calculate the remit tax (tax that must be paid to the government) and tax revenue (tax on transportation cost, which can be kept by the newspaper as revenue) is shown below.

First, the transportation cost is calculated. This is the amount credited to the carrier for delivering a subscription for the rate term period (in the case of the renewal notice export) or the reporting period (in the case of the Trans Cost Remit Tax Report), plus the subsidy amount from Business Rules.

transportation cost = (account copy rate * days) + (subsidy copy rate * days)

If the account credit is greater than the subscriber rate, the transportation cost will instead be the difference between the subscriber copy rate and the minimum copy rate, times the delivery days in the period.

transportation cost = (sub copy rate * days) - (minimum copy rate * days)

The transportation cost is then used to calculate the tax revenue. Because the tax is already included in the transportation cost, it cannot be simply multiplied by the tax percentage to determine the revenue tax. For each tax authority that allows transportation cost to be excluded:

revenue tax = (transportation cost * tax authority percentage) / (1 + total tax percentage)

The revenue taxes for all tax authorities are then added together for the renewal notice export (they are listed separately on the report). The remit tax is calculated based on the revenue tax:

remit tax = total tax - revenue tax

As an illustration of how the revenue and remit taxes would be calculated, let’s look at the following example:

• Transportation cost for the period was 20.00

• Tax authority Florida allows transportation cost exclusion. The tax is 4%.

• Tax authority City also allows transportation exclusion. The City tax is 2%.

• The total tax taken out for the period was 1.80.

The revenue tax calculation for Florida would be: (20 * 0.04) / (1 + 0.06) = 0.75

The revenue tax calculation for City would be: (20 * 0.02) / (1 + 0.06) = 0.37

The total revenue tax would be 1.13, and the remit tax would be 1.80 - 1.12, or 0.68.

Example—Trans Cost Remit Tax Report