Turn off sales tax in QuickBooks Online

Learn how to turn off automated sales tax in QuickBooks Online if you no longer charge sales tax or have turned it on accidentally. You can turn sales tax off without deleting past sales transactions.

Turn off automated sales tax

Follow these steps to turn off the automated sales tax setting. 

1. Follow this link to complete the steps in product
2. Select Sales Tax Settings.
3. Select Turn off sales tax.
4. Select Turn off to confirm.

What Happens When Sales Tax is Turned Off?

When you turn off sales tax:

• Historical sales tax data, including tax agency info and liability reports, is saved. Sales tax will still appear on past transactions for reporting accuracy.
• Sales tax calculations will stop for any recurring invoices going forward.
• All your tax agencies are set to inactive status in QuickBooks Online. This stops tax collection for these agencies within the software. Note: If you need to deregister with tax agencies, you must contact them directly.
• Your sales tax liability reporting remains available. Tax agencies will still show under Other Current Liabilities on your balance sheet.
• Any custom sales tax rates you've set up will remain active. However, you can't add custom rates to new invoices or sales receipts, as the tax fields will no longer appear.
• You can turn sales tax back on later if needed. If you turn back on sales tax, you will need to look at the states you sell in and manually turn on the agencies you are registered with. They won't turn back on automatically.

Remove sales tax from existing transactions (optional)

1. Follow this link to complete the steps in product
2. In the Find report by name field, enter Sales Tax Liability Report. Then, select the report.
3. In the Report period ▼ dropdown, select All Dates. Then, select Run report.
4. In the Taxable Amount column, select the amount to see the transaction report. This will show all transactions that have sales tax for the tax jurisdiction level selected.
5. In the Transaction Type column, select the transaction.
   Note: Make sure to take note of all the details of the transaction(s).
6. In the sales transaction, uncheck the Tax checkbox. This removes the sales tax.
   Once you've made the sale, you may need to send the invoice again if the customer hasn't paid yet. You can also credit the customer for the sales tax if they've paid.