Unpaid Sales Tax

Hi there, Matriarch4.

I'm here to help record the unpaid sales tax. You have two options to achieve this task. You can either create a bad debt or send a different invoice. The options depend on the following reasons:

If you know you aren't to get paid, you can create a bad debt. It ensures your accounts receivable and net income stay up-to-date. You can check this article for the detailed steps of the process: Write off bad debt.

If you've included the tax rate on the invoice you sent, the invoice status will remain open until your customer pays off the balance. If you were'nt able to select a tax rate on the invoice, you can send another one. Then, select either Non-inventory or Service as the product type. Make sure to enter only the tax rate.

When you're ready to record the payment, you can check this link: Record invoice payments. 

You can always get back to this thread if my help is needed.

Thank you so much for the response. I did create a CM to categorize the unpaid sales tax as bad debt. But now my sales tax is off for the reporting month. It has applied sales tax on the sales tax for the address of the customer. I have the non-inventory item set up as non-tax. And the sales tax shows as zero on the CM. So I don't understand why it's applying sales tax. I feel this is connected to another issue I have with the ship to address showing up on invoices. The sales tax then applies for that address and not the shop's address - where the service was sold. Get one problem solved and another is created. The joy of QB’s!

Welcome back to the Community, Matriarch4.

Thank you for informing us of the result of the solution shared by my colleague. This information will direct the steps we'll have to take to resolve your sales tax issue.

Let's double-check the sales entry to ensure no taxable items were added from there. When there's one, QuickBooks will automatically calculate the sales tax. The location of the sale or the ship to address is used to compute sales tax on an invoice, including the customer's tax status and the service or product's tax category.

For more in-depth information, check out this reference: Learn how QuickBooks Online calculates sales tax.

In case, there's a taxable product is listed on the sales entry, I recommend consulting with your accountant. They can advise you on how to handle the transaction to make sure your records are accurate.

You can go over these resources to learn more about how the automated sales tax works as well as the process for managing your taxable items.

• Switch to automated sales tax in QuickBooks Online
• Set up and use automated sales tax in QuickBooks Online

If you require further assistance managing your taxes and other accounting activities, click the Reply button and leave your comments in the field box. I'll get back to help you. Have a good one.