Nonprofit- Individual failed to give Tax Exempt form and was charged sales tax

Good day, @Jackie804. I would be delighted to share the steps with you on how to accurately record transactions in QuickBooks Online. This will ensure that your taxes are recorded correctly.

You'll want to ensure proper refunding of transactions in QuickBooks Online. You have to create a vendor credit and make sure the credit hits the expense account you use for this vendor. Then, select Accounts Payable as the deposit account. Once done, link the two transactions after the deposit has been made. Although this process may seem lengthy, it is the only way to properly refund a business expense.

Here's how:

1. Select + New choose Vendor credit.
2. In the Vendor ▼ dropdown, select your vendor.
3. Depending on how you record purchases with this vendor, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting credit for.
4. Note: If you choose an inventory item, QuickBooks will put it back into inventory. If the item is defective or if you don’t want it added back to inventory, you can make an inventory adjustment.
5. Choose Save and Close.
   
    

   

Then, we can create a bank deposit and select Accounts Payable. You need to pick Accounts Payable, so you can tie the refund to the vendor credit.

1. Select + New and choose Bank deposit.
2. In the Account dropdown menu, select the account where you got the refund.
3. In the Add funds to this deposit section, fill out the following fields:

• Received from: Select the vendor who gave you a refund.
• Account: Select Accounts Payable. Important: 
• Payment method: Enter the method your vendor used to refund you.
• Amount: Enter the amount of your refund.

  4 . Select Save and Close.

Once done, we can link the two transactions, so your expenses are accurate. 

1. Select + New and click Pay Bills.
2. Choose the bank deposit you just created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be US $0.00.
3. Tap Save and Close.

For more details about the process, see this article: Enter vendor credits and refunds in QuickBooks Online.

Additionally, I'll be sharing these articles that will guide you in recording donating and tracking them accurately:

• How to record donations or charitable contributions in QuickBooks Online
• Track funds you receive from donors in QuickBooks Online

Let me know how things go once you've tried the steps. If there's anything else you need from me, feel free to comment below. I'm always here to help in any way I can. Have a great rest of your day.

@Jackie804 

Your question is quite confusing.  You mentioned both vendors and donors, expenses and A/R.  Vendors/expenses and donors/A/R are very different.  The booster club owes money to vendors (generally expenses) and receives money (generally income) from donors.  You mentioned that "two vendors and now will owe the club the money for the sales tax."  Vendors do not owe money to you, you owe money to them.  Are you saying a vendor charged the booster club sales tax because they never received the booster club's sales tax exemption certificate and you're not sure how to record it?  

It’s not difficult. A booster club board member failed to provide two vendors with the tax exemption forms and used the bank card to cover these two charges. The booster club member is now responsible for reimbursing the club for the sales tax. I received the bank feed and I have the supporting documents to attach but it won’t allow me to enter the transaction as split between the non taxable portion and the sales tax which she will need to reimburse the club for.

@Jackie804 

Ahh, OK, got it.  Since these are two different transactions (the vendor charge and the receivable from the board member) I would handle it by recording the expense transactions separately and then creating a separate invoice (or journal entry) for the amount due from the board member.  That way, the expenses will match the bank feed and you will have a separate invoice/journal entry to record the board member's reimbursement when it is received.  The invoice to the board member or journal entry is a debit to A/R (you will need to list a donor) and a credit to the same expense account used on the vendor's expense.  That will book the amount due from the board member and reduce the expense by the amount of the sales tax paid.  Or, if you don't want to have to list a donor, debit an other current asset account called "Due from XYZ" and use that on both the invoice/journal entry and when the payment is received.  That does not require that a donor be listed.  

Hello!  I am the treasurer of First Reformed United Church of Christ and we have been charged sales tax.  We are tax exempt.  Please email me the tax exempt form to correct this situation.  Thank you,  Sandy [Removed]

Hi there, 1231.

Let me route you to the appropriate channel so you can request a sales tax exemption in QuickBooks Online.

Since your company is a nonprofit organization and is exempt from sales taxes, you can contact our Customer Support team and provide a copy of your tax-exempt certificate. They will review and verify your account and update it as Sales Tax Exempt once validated, which will take 5 to 10 business days. If you'd like to request a sales tax refund, you can also submit these documents along with your certificate:

• Customer Account Number (CAN), Company ID, or Federal EIN (if specific to Payroll Services).
• Order number (if available).
• Product or service you purchased.

To connect with our experts, here are the outlined steps:

1. Go to the Help menu, then select the Search tab.
2. Click Contact Us.
3. Enter a brief description of your concern, then select Continue.
4. Choose either Start a Chat or Get a Callback and start connecting with them.

For more information on tax exemptions, check out this article: Request a sales tax exemption and refund.

Additionally, you can create donor's transaction statements to show all the donor's activity depending on the chosen dates.

You can also generate a Transaction Detail by Account report and customize it to your preferred reporting style.

We'll get back to you as soon as possible for any added questions about sales tax exemptions and refunds. Just comment it down, so we can further assist. Stay safe!