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Policy Contact: Accounts Payable Office

1. Purpose

   This policy and its procedures set forth the guidelines for departments to follow when selling goods or services to the general public at the University.

2. Policy
    
   1. The sale of goods or services must be consistent with the University's mission and the normal activities of the college or department.
       
   2. The general public may not be charged at a rate less than that charged to internal users, but they may be charged at a higher rate.
       
   3. When selling goods or services to the general public, individuals are required to follow the procedures set forth below to adhere to proper accounting and payables reporting, as well as sales tax requirements.
       
   4. Questions regarding the sale of goods or services to the general public should be directed to the Accounts Payable Office.
       
3. Procedures
    
   1. If items are purchased for the sole purpose of selling to the general public (i.e. resale purposes), a Cash Index (336xxx) and Account Code (755018) should be used when paying the vendor for the goods.
       
   2. Any funds collected from the sale of the goods or services should be deposited to the same Cash Index (336xxx) used for the purchase of the items being sold. An appropriate revenue Account Code (50xxxx) for sales revenue and Account Code 200010 for the amount of sales tax collected should also be used.
       
   3. Any net fundraising proceeds paid to a recipient should be paid from the same Cash Index and Revenue Account Code used when making the deposit. The revenue account will be debited and offset the revenue collected. This can be done by Journal Voucher (if to a University entity) or by a Direct Pay document (if to a non-University entity). To document the entire transaction, a copy of the vendor’s invoice as well as a copy of the deposit should be attached.
      1. If sales are made for awareness purposes only and not for a fundraiser, this step should be excluded, and the appropriate revenue Account Code for the items sold should be used (e.g. for clothing sales, use 500634). The fundraising revenue account code 500687 cannot be used for awareness purposes.
          
   4. Sales to the general public under this policy are subject to sales tax. Options for collecting sales tax are as follows:
      1. Pay the sales tax directly to the initial vendor at the time the goods are purchased. This will slightly understate the sales tax collection, as sales tax is normally on the sales price which is marked up from cost. However, if it is a one-time fundraiser, this will be allowed.
      2. Include the sales tax in the sale price of the item (sale price includes tax).
      3. Add the correct amount of tax to the sale price of the item and collect from customers.
          
   5. Sales tax collected must be remitted to the South Dakota Department of Revenue via the University's Accounting Office.
      1. Departments who have a resale license and collect sales to be remitted to the Department of Revenue should add these sales and report the correct amount of tax to the Accounting Office by the fourteenth (14th) of the following month.
      2. Departments who do not have their own license should submit a report of their total gross receipts and the amount of sales tax collected to the Accounting Office by the fourteenth (14th) of the following month.

4. Responsible Administrator

   The Vice President for Finance and Budget, or designee, is responsible for the annual and ad hoc review of this policy and its procedures. The University President is responsible for approval of this policy.

Approved by President on 04/15/2016.

Sources: SDBOR Accounting Policies & Procedures Manual