Lawrence Berkeley National Laboratory Sales

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Lawrence Berkeley National LaboratorySales
Use Tax Guidelines
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Sales Use Tax GuidelinesGeneral Overview
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LBNLs Tax Status
Is LBNL exempt from tax? Answer It depends on
the type of tax, sponsor and category of purchase

Federal Income Tax LBNL is An Internal Revenue Code (IRC) Section 115 organization, and Under the Regents of the UC An IRC Section 501 (c)(3) organization State Income Tax CA Reg 23772(a)(1)(E) Sales and Use Tax LBNL is subject to tax for certain purchases made on behalf of certain sponsors/funding sources
TAX EXEMPT
The focus of this briefing is sales and use tax
compliance at LBNL.
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Table of Contents

• General Overview
• Sales Tax vs. Use Tax
• Determining Taxable Transactions
• Sponsors Funding Sources Subject to Tax
• Tangible Personal Properly
• LBNL Tax Payment Mechanism
• Roles Responsibilities
• Requisitioner Roles Responsibilities
• Resource Analyst Roles Responsibilities
• Budget Office Roles Responsibilities
• Procurement Office Roles Responsibilities
• Accounts Payable Roles Responsibilities
• Tax Accountant Roles Responsibilities
• Attachments
• Listing of Materials, Fixtures, Machinery
  Equipment
• Sales and Use Tax Guidelines - Review Questions

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Sales Tax vs. Use Tax

• Sales Tax
• Is charged on invoice by the vendor
• Rate is determined by the point of delivery
• Payment is collected and forwarded to the State
  of California Board of Equalization by the
  vendor or retailer
• Use Tax
• Is accrued by the purchaser if no sales tax
  charged on invoice however, the purchase is
  subject to sales/use tax regulations
• Rate is determined by the final destination where
  the good will be consumed or utilized
• Payment is forwarded to the State of California
  Board of Equalization by the purchaser

Generally speaking, LBNL fulfills its tax
responsibilities via the use tax process.
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Determining What Transactions areSubject to
Sales and Use Tax
STEP 1
STEP 2
No
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Step 1 Is the Purchase for a Sponsor or Funding
Source that is Subject to Tax?
Non-Taxable Taxable
DOE Operating WFO Non-Feds CRADAs
WFO- Fed Award types of F1, F3, F4 or F9 WFO-Fed - Award types of F2, F5, F6, F7 or F8
NIH Award type of N1 NIH Award Types of N2, N3, or N4
Royalties Contractor Sponsored Research (CSRs)
Construction Purchases of Machinery and Equipment Including labor related to fabrication or assembly on equipment where title passes to DOE Construction Purchases of Fixtures and Materials
Rental Leases for all rental leases regardless of funding source but does NOT include real property or lease to own
Gifts
A listing of Materials, Fixtures, Machinery
Equipment can be found in Attachment I.
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Step 2 Is the Purchase Tangible Personal
Property?

• Tangible Personal Property (TPP) can be
• Seen
• Weighed
• Measured
• Felt or Touched
• Perceptible to the senses

• Examples of TPP include
• Books
• Computers
• Equipment
• Furniture
• Office Supplies
• Machinery
• Materials

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LBNL Taxable Transactions
STEP 1
STEP 2
Is the purchase for a sponsor or funding source
that is subject to tax?
Is the purchase tangible personal property?
Yes
Yes
Sales/use tax due
Tangible Personal Property can be
Seen
Weighed
Measured
Felt or Touched
Perceptible to the Senses
Taxable Sponsors/Funding Sources
WFO Non-Feds CRADAs
WFO-Fed - Award types of F2, F5, F6, F7 or F8
NIH Award Types of N2, N3, or N4
Contractor Sponsored Research (CSRs)
Construction Purchases of Fixtures and Materials
Rental Leases for all rental leases regardless of funding source but does NOT include real property or lease to own
Gifts
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LBNL Tax Payment Mechanism

• Because the majority of LBNLs purchases are not
  subject to sales tax, the Laboratory presents our
  resale certificate to vendors for most
  transactions.
• To properly collect and remit tax due on LBNL
  taxable transactions, the STX burden rate has
  been established in the system. The STX burden
  is applied to the project id for the taxable
  sponsors/funding sources identified on slide 7
  for the following TPP resource categories

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LBNL Tax Payment Mechanism

• Rental Contracts
• The contract will include articles/clauses
  requiring the vendor to bill LBNL for use tax on
  the invoice.
• STX burden will not be applied to rental project
  ids.
• Construction Contracts
• The contract will include articles/clauses
  addressing that the vendor will charge sales/use
  tax on materials and fixtures, and accept LBNLs
  resale certificate to exempt sales/use tax on
  equipment and machinery, since title on equipment
  and machinery pass to the U.S. DOE.
• Generally, the sales tax will be included in the
  construction contract pricing or on the invoice,
  not by STX burden code.

In this world nothing can be said to be certain,
except death and taxes. Benjamin Franklin
Questions? Please contact the Controllers
Office Tax Accountant, Yvonne Deshayes at x6280.
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Sales Use Tax GuidelinesRoles
Responsibilities
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Roles Responsibilities
Process Participant Role Sales Use Tax Responsibility
Requisitioner Appropriately identify sponsor and funding source Utilize the appropriate item and resource category during the requisition process Raise concerns or issues to your Resource Analyst or the Controllers Office Tax Accountant
Resource Analyst Collaborate with Requisitioner to appropriately identify sponsor and funding source Collaborate with the Requisitioner to utilize the appropriate resource category and type during the requisition process Ensure that project id set up supports sales and use tax compliance efforts Raise concerns or issues to the Controllers Office Tax Accountant
Budget Office Validate and approve project id set up Collaborate with Controllers Office Tax Accountant when changes to the burden code matrix, which effect sales tax, occur
Procurement Ensure proper use of Resale Certificate Validate item category and correct as needed Ensure contract contains appropriate clauses/articles for sales and use tax purposes The Procurement Department plays a pivotal role in the Laboratorys sales and use tax compliance efforts and as such, it is critical that staff members have a complete understanding of the Laboratorys approach to sales and use tax compliance. As it relates to the PCard program, Procurement is responsible for accumulation of the documentation required for sales tax recovery.
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Roles Responsibilities
Process Participant Role Sales Use Tax Responsibility
Accounts Payable Be familiar with vendors that supply operating leases, if an invoice does not have sales tax, question it Be familiar with vendors that perform construction contract work and their methodology for billing sales tax As most of the Laboratorys tax compliance efforts will be through the use tax process, if there is an invoice with sales tax on it, question it Raise concerns or issues to the A/P Lead Accountant or the Controllers Office Tax Accountant The Accounts Payable Team plays a pivotal role in the Laboratorys sales and use tax compliance efforts and as such, it is critical that staff members have a complete understanding of the Laboratorys approach to sales and use tax compliance.
Tax Accountant Assist Accounts Payable, Procurement and other process participants with concerns or issues File monthly use tax prepayments and quarterly use tax returns Monitor sales and use tax compliance through ongoing assessments and reviews Serves as the primary interface between the Laboratory and the State when inquiries or questions arise The Tax Accountant is the Laboratorys subject matter expert on tax compliance and provides assistance and oversight to the varied process participants who share responsibility for sales and use tax compliance.
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Sales Use Tax GuidelinesAttachments
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Attachment I Materials, Fixtures, Machinery
and Equipment

• Items usually regarded as materials

Items usually regarded as fixtures

• Asphalt
• Bricks
• Builders Hardware
• Caulking material
• Cement
• Conduit
• Doors
• Ducts
• Electric wiring and connections
• Flooring
• Glass
• Gravel
• Insulation
• Lath
• Lead
• Lime
• Linoleum
• Lumber

• Air conditioning units
• Awnings
• Burglar alarm and fire alarm fixtures
• Cabinets, counters, and locks (prefabricated)
• Electric generators (affixed to and accessory to
  a building, structure or fixed works)
• Elevators, hoists, and conveying units
• Furnaces, boilers, and heating units
• Lighting fixtures
• Plumbing fixtures
• Refrigeration units
• Signs
• Telephone switchboards and instruments
• Television antennas
• Transformers and switchgear
• Vault doors and equipment
• Venetian blinds
• Fixtures and materials as defined in Regulation
  1521
• Wiring, piping, etc., used as a source of power,
  water, etc. for machinery and equipment
• Radio transmission antennas

Drill presses Electric generators (unaffixed, or,
if affixed, which meet the requirements of
Regulation 1521) Lathes Machine tools Moving
parts of cranes Printing presses

• Items usually regarded as machinery and equipment

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Attachment II Sales and Use Tax Guidelines -
Review Questions
Question Answer Choices
LBNL is exempt from sales and use tax. True or False
Rental contracts (i.e. copiers) are subject to use tax. True or False
Gifts is a non-taxable category for sales/use tax. True or False
All NIH grants are taxable. True or False
Currently, MATRL, MATRB and PROCD are the only resource types subject to sales and use tax, for sponsors and funding sources subject to sales/use tax. True or False
LBNL wants to purchase a piece of equipment using DOE Operating funds. From the choices provided, which is most appropriate response. Procurement creates contract, presents resale certificate to vendor, vendor does not charge sales tax, AP pays invoice, title passes to DOE, no tax due. Procurement creates contract, does not present resale certificate, vendor charges tax, AP pays tax, title passes to DOE, tax is due. Procurement creates contract, presents resale certificate to vendor, vendor charges sales tax, AP pays sales tax, tax is due.