I recently created a sales receipt for a credit card purchase through QuickBooks Online. I use Avalara Sales Tax Solutions to calculate sales tax on invoices and sales receipts. I discovered that last week Avalara incorrectly overcharged sales tax by $10.88 on the sales receipt.
I'd like to be able to refund the customer the $10.88 sales tax overpayment, but I'm not quite sure how to handle that in QuickBooks Online. Since I calculate sales tax via Avalara, I don't think QuickBooks will let me do a sales tax adjustment. I'm not sure how I'd do a refund when the money is currently in my sales tax liability account.
Would it be easiest to do a full refund and then create another sales receipt?
Let me help share information on how to record a sales tax refund in QuickBooks Online (QBO).
In QBO, you can record the refund as a deposit to the liability account used when paying the taxes. You can also edit the invoice or sales receipt if the invoice hasn't been paid yet. If it was paid already, you have to refund the customer for the sales tax that was charged.
Log in to your QBO account.
Go to the Plus (+) icon.
Select Refund Receipt.
Select the same customer that needs to be refunded, then the bank account from which the refund will come from.
Select the same taxed Product/Service item as the original invoice or sales receipt.
Enter the same information on the next line but this time, enter a negative amount/quantity and uncheck the Tax box.
Thank you for your help. While this info is very helpful, I may have forgotten to mention that I am looking to do a partial refund of sales tax. QBO calculated sales tax incorrectly on the Sales Receipt as $14.16, instead of $3.28 which is the correct amount. I'd like to reimburse the customer $10.88 if possible. Upon opening a Refund Receipt, I noticed that I can only select an income account to refund the customer and not a liability account. The overpayment of sales tax is currently in a sales tax liability account.
Would I need to refund the customer from an income account and then create a journal entry to move the funds from the sales tax liability account back to the income account I used to refund the customer?