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Treasurer

Record sales tax and other money you are holding

Money collected for somebody else is not your revenue. Record it against a liability category so it stays off your income statement and out of gross receipts.

When you are done

You will have a liability category holding what you owe, a balance sheet that shows it as a claim against your bank balance, and gross receipts that do not include it.

Add a category for what you are holding

  1. Open Chart of accounts from the left sidebar.

  2. In the form headed Add a category, set Kind to Money we owe.

  3. Name it for what it is.

    Sales tax collected. State PTA dues payable. National PTA dues payable.

  • A liability category takes no 990 line. Money you are holding for somebody else was never your revenue, so it belongs on no line of the return, and PTO HQ refuses to map one to it.
A fourth kind of categoryOn the Chart of accounts, set Kind to Money we owe. Name it for what it is: Sales tax collected, State PTA dues payable, National PTA dues payable. A liability category takes no 990 line, and PTO HQ refuses to map one to it — money you are holding for somebody else was never your revenue, so it belongs on no line of the return.Add a categoryNameSales tax collectedKindMoney we oweGroupNo groupAnd it maps to no line of the returnMoney held for somebody else was never your revenue, so no 990 lineapplies to it.

Split it off the sale it came in with

  1. Record the sale as one transaction for the full amount the card or the cash drawer took.

  2. Split it: your own price on the income category, the tax on the liability category.

    A $412.18 spirit wear sale in a state charging 8.25% is $380.77 of income and $31.41 of sales tax.

  • The whole $412.18 reached the bank either way. What the split records is that $31.41 of it belongs to the state.
Split the tax off the sale it came in withRecord the sale for the full amount the card or the drawer took, then split it. A $412.18 spirit wear sale in a state charging 8.25% is $380.77 of income and $31.41 of sales tax. The whole $412.18 reached the bank either way; what the split records is that $31.41 of it belongs to the state.Spirit wear sale$412.18Spirit wear$380.77Money in — yoursSales tax collected$31.41Money we owe — the state's$380.77 + $31.41 = $412.18. The bank balance does not change; the ownership is now recorded.

Pay it over against the same category

  1. When you remit, record the payment against the same liability category.

    The balance goes back down, and the balance sheet shows what is left owing.

Read it on the balance sheet

  1. Open Reports, then Balance sheet and liabilities.

    Posted liability categories appear as claims against your cash, and net assets are your cash less what you owe: $32,118.70 in the bank holding $31.41 of sales tax is $32,087.29 of net assets.

  • Whether your state taxes what your unit sells, and whether your tax-free days cover it, is a question for your state PTA or your state comptroller. PTO HQ records what you tell it and works none of that out for you.
What it does to the balance sheetPosted liability categories appear on the balance sheet as claims against your cash, and net assets are your cash less what you owe. The money is still in the bank, which is why the cash line does not move. Gross receipts on the 990 report exclude it, which is the figure that decides whether your unit files a 990-N, a 990-EZ or the full 990.Cash in the bank$32,118.70−Sales tax collected$31.41=Net assets$32,087.29The cash line does not move — the money is still in your account. What changed isthat $31.41 of it is spoken for, and gross receipts on the 990 exclude it.

How to check it worked

  • The category appears under Money we owe on the Chart of accounts, with no 990 line set.
  • The balance sheet lists it under liabilities for the amount still held, and net assets are lower than cash by that amount.
  • The 990 report does not list the category, either on a revenue line or as unmapped.
  • Gross receipts on the 990 report exclude the tax you collected.

If it did not work

What you seeWhat it meansWhat to do
PTO HQ refuses to set a 990 line on the category.The category is a liability. Money held for somebody else was never your revenue, so no line of the return applies to it.Leave it unmapped. If the money really is yours, change the category's kind to Money in and map it then.
The balance sheet still prints the sales-tax line blank with a note.Nothing has been posted against a liability category yet, so PTO HQ has no figure and says so rather than printing a plausible zero.Record the tax on a sale as a split against a liability category. The note is replaced by the figure as soon as one exists.
Your fund balances no longer tie to the bank after adding a liability.This should not happen. Money in a liability category is still cash in your account, and the fund balances include it.Check the split adds up to the transaction total. If the funds and accounts still disagree, write to support with the transaction date and amount.

This isn't legal, tax, or insurance advice. Confirm filing dates, bonding conditions, and your state's requirements with your CPA, your state PTA, and your insurer.