When filing a state corporate income return, a payment to Virginia for an Out of State shareholder's potential income tax liability was paid as required. Shareholders who are Virginia state residents must pay their own tax. How do I record the exception transaction? It is the shareholder who may dispute the tax liability and any refund is returned to the shareholder. The company may never know the outcome. But the company makes the full payment per the tax return filing. What account is used to record the payment to Virginia. It is not PAYROLL related.
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