How To Resolve Common QB Sales Tax Issues

Subsequent Period Changes to The Invoices Or Sales Receipt

Changing any information on the invoices or sales tax after sales tax returns have been filed are problematic as it changes the underlying information used to support sales tax returns filed. 

Here are common scenarios that we see:

Facts: 

An invoice is entered into QuickBooks using the following information:

A sales tax return is filed for the month of January reporting taxable income of $1,000 and sales tax collected of $82.50.  Payment is made for the sales tax due. 

Scenario #1.  Invoice Is Deleted. 

Action.  In March, the invoice is deleted.

Result:  The business has now over reported and overpaid paid sales tax to the state for the month of January

Solution:

1. To get the sales tax refunded, the business must amend the original sales tax report or adjust the next report. 
2. Instead of deleting invoices, the proper treatment is to create a credit memo in the current month. 
3. Close the period to transactions cannot be entered in closed months. 

Scenario #2-Date on Invoice Is Changed: 

Action:  In March, the date on the invoice is changed from January 1^st to March 1^st. 

Result.  The result is that the business will have reported the sales tax collected for BOTH the month of January and the month of March. 

Solution. 

1. The business needs to amend the original sales tax return filed or adjust a future sales tax return. 
2. The business should not change the date of invoices.  If the invoices need to be recreated, the business should create a credit memo in the current period, apply it against the original invoices, and then create a new invoice in the current period. 
3. Close the period to transactions cannot be entered in closed months.      

Scenario #3:  Taxable Sales Tax Amount Is Changed

Action.  The taxable amount on the original invoice is increased.

Result.  Additional sales tax is due to the state but relates to a prior period and won’t be reported on a sales tax return.

Solution:

1. Create A Create Memo for The Original Invoice in the current period and recreate the invoice in its final version or
2. If a taxable item should not be on the invoice, create a credit memo for only the one item in the current period or
3. If a taxable item should be added, create a new invoice for ONLY the new item being added.   

AND

Close the period to transactions cannot be entered in closed months.