Overview of how the system handles Federal Excise Tax for the user how has to pay it to vendors, collect it from customers and pay it to the government
In the Chart of Accounts a General Ledger Account Number is setup for Federal Excise Tax as a short term Liability account.  Federal Excise Tax is recognized in the Inventory system with the line code of FET.  Items with Federal Excise Tax applied are setup in Inventory with an * memo and the core charge field becomes the excise tax field and charges the customer automatically.  For items that are non inventory the seller can simply add the FET item to the sale for collection of the Federal Excise Tax.  Paying Federal Excise Tax to the vendor is done either manually in Payables or on the Purchase Order the FET item is placed on as a separate charge and directed to the Federal Excise Tax GL.  When Federal Excise is due to be reported to the government (monthly or quarterly) the bookkeeper will report out the Sales to the Federal Excise Tax GL and the Payables / Checks to the Federal Excise Tax GL to get the total amount due.

NOTE:  if you do not have to collect Federal Excise Tax from your customers or remit to the government because your Vendors do that for you then simply post the amount paid for Federal Excise Tax as an expense.

• Setup Inventory Items to charge Federal Excise Tax at point of sale
• Setup FET line code to make sure Federal Excise Tax goes to the proper General Ledger Account
• How to track Federal Excise Tax paid out to Vendors on Purchase Orders to Payables
• How to Report Federal Excise Tax Collected and compare to General Ledger
• How to Report Federal Excise Tax Paid Out and compare to General Ledger