Why does QuickBooks online automatically make the late fees it adds taxable (even when the service is not taxable, or the customer is exempt)?

I appreciate you for connecting with us, BWAquatics. I'll share some information about the issue you encountered with your late fees in QuickBooks Online (QBO).

There's a reported case about automatically marking late fees as taxable within QBO. This issue occurs when an automatic late fee is applied to an invoice, inadvertently changing the tax-exempt status of all items on that invoice to taxable.

Rest assured, our engineering team is actively working on a solution to this problem. In the meantime, I recommend manually editing each invoice where a late fee is applied. Uncheck the taxable box for those items to ensure compliance with tax regulations until we implement a permanent fix.

To ensure you receive timely updates regarding this issue, I encourage you to contact our dedicated support team to add you as an affected user. They will securely collect your contact information for this purpose.

Here’s how you can reach out:

1. Access the Help menu at the upper right corner of your QBO dashboard.
2. Type Contact Support in the search tab and press enter.
3. Select Contact Us at the bottom of the screen.
4. In the Ask about something else section, enter the issue.
5. Hit on Continue and choose a way to connect with us.

To expedite the transaction, kindly provide this investigation number INV-111348.

Please note that our customer service hours for Plus, Essentials, and Simple Start are Monday through Friday from 6 AM to 6 PM PT and Saturday from 6 AM to 3 PM PT. Advanced support is available 24/7.

Furthermore, I’ve included these valuable articles specifically focused on managing invoices in QBO. These resources offer practical tips and best practices to enhance your invoicing experience:

• Send invoice reminders automatically or manually in QBO
• Set up and send progress invoices in QBO
• Schedule recurring invoices in QBO

We truly appreciate your patience as we work diligently to resolve this issue. If there’s anything you’d like assistance regarding your sales forms, please provide the details below. My team and I are here to support you.

@Aldren18 

RE: There's a reported case about automatically marking late fees as taxable within QuickBooks Online. This issue arises when an automatic late fee is assessed on an invoice. It inadvertently changes the tax-exempt status of all items on that invoice to taxable.

Our engineers are currently working to fix this issue as soon as possible.

I have a suggestion for your engineers: Test your software and make sure it works before you release updates, not after.

Just a thought.

This has been a known issue for over 2 years, with no fix in sight. 

We understand how important it is to have accurate tax settings for your late fees, CMitch95, and we appreciate your patience. While there isn't a permanent fix yet, we can manually adjust the tax settings for late fees on your invoices. I'll also share steps to reach out to our live support to have this checked again.

Follow these steps to check off the sales tax field:

1. Go to Sales, then click on Invoices.
2. Open the invoice that has the late fee added by clicking View/Edit.
3. Locate the late fee item and uncheck the sales tax box.
4. Once done, click Save and Close to save the changes.

If you need additional help, our live support team is available to assist with this specific case and offer further support. Here’s how to reach out:

1. Open QBO and log in to your account.
2. Click on the Help button.
3. Select Contact Us at the bottom of the help window.
4. Provide a brief description of your issue.
5. Choose your preferred method of communication, such as a callback from support or live chat.

Additionally, for future reference, I'd like to share this beneficial article about generating a list of all customers with non-taxable sales: Create a Non-Taxable sales report in QuickBooks Online.

If you have other queries, please feel welcome to add them to the thread. The Community team is always available around the clock to provide you with assistance. Take care.

I already have to do that, and have been for the last 2 years. If it is a feature within QB to have the taxable box automatically selected, then we should have the ability to turn that automatic feature off. 

@FaithA  RE: We understand how important it is to have accurate tax settings for your late fees, CMitch95, and we appreciate your patience. While there isn't a permanent fix yet

Well, there's no hurry, right? It's only been years. After all, are we really that sure that the governing authorities care that much about proper taxation and reporting? I mean, really, does anyone? Intuit doesn't seem to care...