2018-02-13 00:00:00TaxesEnglishLearn how a small business owner can deal with a necessary change of the sales tax rate on outstanding invoices.https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/accountant-reviews-outstanding-invoices-during-sales-tax-rate-change.jpghttps://quickbooks.intuit.com/ca/resources/taxes/oustanding-invoices-sales-tax-rate-change/How to Deal With Outstanding Invoices During Changes to Sales Tax Rates

How to Deal With Outstanding Invoices During Changes to Sales Tax Rates

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If an invoice is outstanding, the customer is responsible for the amount due. However, if there is an upcoming sales tax rate change, complete the following steps:

  1. Inform the customer that a tax rate change is happening on date X, and give the option to pay immediately to avoid paying more.

  2. If refused, add a line item to the invoice with the additional tax change, detailing the additional tax due. For example:

  • Pre-tax amount due: $10,000
  • Initial sales tax (8%): $800
  • Change in sales tax (+1%): $100
  • New amount due: $10,900
  1. Remind the customer again of the option to pay early. If nothing is done, issue the new invoice.

On the other hand, you can take the extra tax added as a loss on all outstanding invoices, ensuring that customers pay exactly what was due at the time when their invoices were generated.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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