Introduction

This document will cover how in AMS you can select the method of how you want the system to post to the General Ledger the Excise Tax Dollars that are paid when wine moves from Bond to Tax-Paid or is sold out of bonded locations.

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Excise Tax Dollars

The Excise Tax $ Control field is located in the Part Master set up for each product (INFMM.ACP). You will also need to set up other tables (ACT, MAX, and MCA) that tell the system which General Ledger Accounts in the Chart of Accounts to record to. These mappings are how the system knows what happens to the excise tax dollars when a part is transferred or sold (from bond).

Part Master (INFMM ACP) - Excise Tax $ Control Field

Excise Tax $ Control Codes

Summary of each code and how the dollars are set up to post to the GL

The first character indicates E=Expense and I=Inventory. The second character of the code indicates how it is expensed. C=by Cost Center, E=Expensed to one Expense Account. Although any of these methods can be used, the (IC) and (IE) are most commonly used and the (IC) method matches the IRS rules the closest. This decision is how you wish to handle it for your business. The details for each of the options above are defined in this document using T - Charts on how they post to the General Ledger and where the account numbers are defined.

Code EC - Expense > COGS

This option would be selected if you want to expense the Excise Taxes immediately upon the transfer from Bond to Tax-Paid to a single Excise Tax Account. On the initial transfer, the costs would post to a single account, and then when sold, it would be reversed from the original account and posted to the expense accounts using the set up from the MAX table (OE =Wholesale Shipments) and/or the MCA table (PS =Retails Shipments).

Footnote:

1. Transfer Journal posted moving wine from Bond to Tax-Paid

2. Accounts Payable to pay the taxes

3. Cost of Goods journal posted when the item is sold

In order for the system to know how to post, the ACT item Codes and the G/L Accounts (Footnote 1 & 2) need to define in the ACT Table codes. Then the Cost Center G/L Accounts (Footnote 3) needs to be defined in the MAX Table (OE=Wholesale Sales) and/or MCA Table (PS=Retail Sales). These are all individually outlined in the Setup of this option below.

Table Set Up for Code EC - Expense > COGS

Code EE - Expense

This option is the same as using NO=No Dollars outlined below, except the system will post the expense in the month that the transfer was made when the transfer journal is run at the end of the month. The payment will be posted to the Excise Tax Payable account when you pay the taxes.

Footnote:

1. The transfer is posted the month the wine is moved from Bond to Tax-Paid with the Transfer Journal. You will set up the system to Debit the Excise Tax Expense Account and Credit the Excise Tax Payable account.

2. Accounts Payable is posted when the payment is entered to pay the taxes and this will Debit the Excise Tax Payable Account and Credit the Cash Account.

In order for the system to know how to post, the Expense Account and the G/L Accounts for (Footnote 1 & 2) you need to define them in the ACT Table. This is outlined in the Setup instruction indicated in each option in this document.

Table Set Up for Code EE - Expense

Code IC - Inventory > COGS

This is the most common selection. When the wine is transferred from Bond to Tax-Paid, the value of the excise tax is added to the value of Inventory Cost by the item on the Balance Sheet. It is only expensed as defined in the MAX and MCA tables when sold. There are Inventory reports that will show the Wine Cost separated from the Excise Tax Cost by location and by part. You can also run reports that show the amount of tax to be paid based on the cases transferred from Bond to a Tax Paid locations and or Sold from Bonded location.

Footnote:

1. Transfer Journals post dollars from movements of wine from Bond to Tax-Paid

2. Accounts Payable post the dollars when the taxes are paid

3. Cost of Goods journal post dollars when the item is sold

Here you will identify the Inventory Account indicated in footnote (1) above and then you will also need to identify the Excise Taxes Payable Accounts in the footnote of (2) above. As well as the Excise Tax Expense By a Cost Center indicated by the footnote (3) as defined in the MAX Table (OE=Wholesale Sales) and MCA Table (PS=Retail Sales). These are all individually outlined in the Setup of each option.

Code Ie - Inventory > Expense

This option is the same as IC except it only posts to a single Expense Account – not based on MAX and MCA tables.

Footnote:

1. Transfer Journal posted moving wine from Bond to Tax-Paid

2. Accounts Payable to pay the taxes

3. Cost of Goods journal posted when the item is sold

In order for the system to know how to post to which accounts, you will need to define them in the ACT Table, referenced on the next page. Here you will identify the Inventory Account indicated in footnote (1) above and then you will also need to identify the Excise Taxes Payable Accounts in the footnote of (2) above. As well as the single Excise Tax Expense Account defined in the ACT table as indicated by footnote (3).

Code NO - No Dollars

This option would be used if you want the taxes only to post to one Expense Account. The entry would be completely handled thru the Accounts Payable entry. The inventory system would not be involved at all in this process.

Footnote:

1. When the Voucher/Invoice is entered into the Payable system you indicate the G/L Excise Tax Expense Account that you want the dollars to post to. When the journal is run at the end of the month, the system will Debit Excise Tax Expense Account and Credit the Accounts Payable Account.

2. When a check is cut, the Cash Account will be credited and Accounts Payable debited.

Note: If you are setting up the system for the first time, and have handled your taxes this way in the past on your old system, that does not preclude you from changing this to one of the other options outlined in this document now. To change how your excise tax is handled from your old system to ours, you would need to take into account how the expenses were handled and be sure to correct it in the General Ledger at the beginning. If you have previously expensed your tax and now you want to switch to the inventory method (IC) you will need to determine the tax amount that represents the current inventory in Taxpaid locations and load that into the Excise Taxes Expense account as a negative dollar and a positive dollar amount into your Finished Goods Inventory on the Balance Sheet. If you have already expensed the tax in your previous system, with IC the system will expense it again when sold. This would be double-dipping on the expense.

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