The recommended approach is to enter a mock purchase transaction to accrue the use tax for reporting, and then enter a sales transaction for the free items and the amount of use tax owed. This method will charge the use tax to the customers, without requiring any custom tax schedules or details.

1. Create a posting account called Promotion Clearing.
   • This might be best categorized as an “Accounts Payable” account.
2. Create a posting account called Promotional Use Tax Expense.
   • This might be best categorized as a “Tax Expense” account.
3. Create a vendor ID called PROMO.
   1. Set the vendor's Accounts Payable account to the Promotion Clearing account number.
   2. Set the vendor's Purchases account to the Promotion Clearing account number.
   3. Set the vendor's Tax account to the Promotional Use Tax Expense account number.
4. Create an item number called PROMO TAX.
   1. Give the item a description like “Use tax on promotional items”.
   2. Make the item a flat fee.
   3. Make the item nontaxable.
5. Configure DynamicZip .
   1. Open the DynamicZip Setup window.
   2. Enable the Accrue Use Tax setting.
   3. Enable the Charge Tax Expense setting.
   4. Enable the Trx Base on Vendor: Purchases settings.
   5. Save and close the DynamicZip Setup window.

Enter a mock purchase transaction to accrue the use tax for reporting.

1. Open the Payables Transaction Entry window.
2. Enter PROMO for the Vendor ID.
3. Enter a Tax Schedule ID based on the appropriate Tax Location.
4. Enter the amount that you need to collect use tax on (Typically, this is the promotional item's cost) for the Purchases.
5. Tab down to the Tax field. The tax should calculate.
6. Zero the tax amount. This will eliminate tax billed by the vendor, while accruing the use tax owed to the Promotional Use Tax Expense account.
7. Enter the document amount into the Cash field. This will balance the amount owed to the vendor for the promotional item(s).
8. Post.

Enter a sale transaction for the free, promotional item(s).

1. Open the Sales Transaction Entry window.
2. Enter the appropriate Customer ID and Address.
3. Enter the free item(s).
4. Enter the PROMO TAX item.
   1. Enter a quantity of 1.
   2. Enter a unit price equal to the amount of use tax accrued in the mock purchase transaction.
5. Post.

IMPORTANT The use tax on free, promotional items cannot be entered into the Tax field because doing so will cause conflicts with the Reconcile Documents feature of the DynamicZip Tax Reports.

The use tax can be reported using DynamicZip use tax reports.

1. Open the DZ Reports window.
2. Press the DZ Report Wizard button.
3. Press Next on the first wizard screen
   1. Choose to “Create Report For” the state where you collected the use tax. Press Next.
   2. Choose Purchases, and then press Next.
   3. Choose to “Report of Tax:” Accrued. Press Next.
   4. Enter your desired date range, and press Next.
   5. Enter a Report Option Name, and press Next.
   6. Choose your desired printing method, and press Next.
   7. Review your selections, and press Finish. The report will be inserted in your Print List.
4. Press the Print button.

NOTE: On the sales tax reports, this use tax should show up as a tax exempt line item.

Frequently Asked Questions