Automated and Custom sales tax

Hello there, @teri101.

Let me address your questions and provide further insights on custom and automated rates.

Firstly, you are correct in noting that custom rates that were set up previously will take precedence. The Automated Sales Tax (AST) feature generally does not override these pre-established rates since they are already active in your system.

In your second question, the AST system is built to make managing sales tax easier by automatically updating, and it will reflect the most current tax laws and rates. You can consider switching to using it instead of the custom rates.

Regarding your third question, if you choose to Make inactive the custom rates, you have the option to do so so that the Automated Sales Tax will be selected first when you create customer transactions, e.g., invoices, sales receipts. Although they will no longer appear as options under Sales Tax settings and sales forms, these rates will still be visible in the tax liability report for previous transactions that used these rates.

Addressing your final concern, the functionality to sort custom rates directly is not available. To simplify and streamline your process, I recommend considering the switch to using the AST feature, which could help manage the rates more efficiently.

Additionally, to help you record, adjust, and delete sales tax payments in the Tax Center in QuickBooks Online, check out this article: Manage sales tax payments in QuickBooks Online. It also provides information on how to handle sales tax payment issues.

If you have further questions about automated and custom sales tax, please do not hesitate to use the Reply button below to continue our conversation.

I just want to double check because the QB rep yesterday there was no way for us to use Automated rate updates even if we deleted the custom rates...I didn't use the word "inactive" which I should have knowing that QB never really "deletes" after a transaction is made with the data, but I did interpret her response to include "inactive".  

Is there a downside to doing making everything inactive 16 days into a new quarter (we pay sales tax quarterly)?  We really don't have that many transactions.  or should we wait till July 1...and then do change it all to inactive?

Also, asking because i saw the very many/tedious instructions if you want to turn off automated rates, so wanted to make sure what else we need to do if we do the reverse in inactivating custom...

Thanks for the quick response!

Inactivating and deleting custom rates are indeed different in QuickBooks, Teri. I'll share further details on managing your tax rates in QBO for a smoother transition with minimal adjustments.

Initially, you're correct when you mentioned that you should've used the word inactive rather than delete rates. When you make a rate inactive, it won't appear in new transactions but will remain in the system for record-keeping. This means that even if you make custom rates inactive, the Automated Sales Tax (AST) should be able to update rates automatically in your new transactions. Making rates inactive won't affect old data where these rates were used.

Additionally, if you've decided to make your custom rates inactive 16 days prior to the new upcoming quarter, this will minimally affect your transactions, as you mentioned having only a few recorded.

Nevertheless, making a change on the first day of the quarter could offer a closer transition since they're aligned with your fiscal year. This isn't however strictly necessary to follow, this will still depend on your preference.

Lastly, I'll provide a simplified step on how to make your rates inactive in QBO, you can follow the steps below:

1. Navigate to Taxes, and then select Sales Taxes.
2. Click Sales tax settings, then choose the agency or custom rates you want to inactivate.
3. Click the dropdown arrow next to Edit.
4. Select Make Inactive..

You can read this page for more detailed information on how to handle custom rates in QBO: Use custom rates to manually calculate taxes on invoices or receipts in QuickBooks Online.

Moreover, you can check this page for further details on running a Sales Tax Liability report to see your tax dues: Run the Sales Tax Liability report.

 Your proactive approach to managing your tax rates is commendable, Teri. Please know that you can always revisit this thread if you have any other questions about your tax rates. The Community is always here to help.