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SteelRoots
Level 2

Changing default tax rate

Currently when i make an invoice the tax rate is automatically set to "based on location" which is the retail rate for my state. I mostly do wholesale so every invoice i have to change it to my custom wholesale tax rate I made. I can't figure out how to change the default tax rate. I even tried to find a work around by setting a tax rate for each individual customer, but I couldn't figure that out as well. I was on the phone with customer support for 1 hour and the problem couldn't be solved. 

 

FYI I am the master admin and have tried using QBO in incognito mode, but it didn't change anything. 

 

Here's some things i tried so far. 

Attempt 2 


At this link number 5 simply does not exist on my end. I only have the option to make the customer tax exempt. 

 

Attempt 1 

 

At this link number 3 does not exist for me. I simply don't have this option.

 

I have also gone to taxes->sales tax settings->select custom rate-> edit but no options here exist for me to set my custom rate as a default tax code.  

I honestly can't believe how hard it is to do this. It really shouldn't be this difficult and shouldn't take 3 plus hours of my time to research, contact customer support, and write this post just to solve this.

Solved
Best answer May 29, 2020

Best Answers
JenoP
QuickBooks Team

Changing default tax rate

We appreciate and have taken note of your feedback about the tax settings in QBO, SteelRoots.

 

For now, there's no option to change the default tax rate from Based on location to Custom Rates. I also checked the links that you shared and it looks like Attempt number 2 is an article for QBO Canada, while Attempt number 1 is for QBO Australia. This is the reason why yo're unable to see these options in your account. 

 

QBO USA uses the Automated Sales Tax function, and will always use the Based on location tax rate. For now, you'll need to manually click the drop-down list and select the custom rate when creating your sales transactions. 

 

Let me also share these additional guides when filing and paying your sales taxes in QBO:

 

Let me know if you need anything else. 

View solution in original post

28 Comments
JenoP
QuickBooks Team

Changing default tax rate

We appreciate and have taken note of your feedback about the tax settings in QBO, SteelRoots.

 

For now, there's no option to change the default tax rate from Based on location to Custom Rates. I also checked the links that you shared and it looks like Attempt number 2 is an article for QBO Canada, while Attempt number 1 is for QBO Australia. This is the reason why yo're unable to see these options in your account. 

 

QBO USA uses the Automated Sales Tax function, and will always use the Based on location tax rate. For now, you'll need to manually click the drop-down list and select the custom rate when creating your sales transactions. 

 

Let me also share these additional guides when filing and paying your sales taxes in QBO:

 

Let me know if you need anything else. 

View solution in original post

lori G
Level 1

Changing default tax rate

Hi Steelroots, 

 

I totally feel your pain.  Ive just switched a few months ago from 18 yrs using QB Desktop to QBOnline and this is my only regret.   

 

The sales tax is a nightmare every month.  The default "based on location" is driving me nuts.  I have yet to find a work around and am also having to change each individual sale which is ridiculous.  I cant believe that we are the only ones having this problem with so many tax rates across the country, this should be much easier to customize!!  

 

I too have spent way too much time with support.  They are super nice and try to be helpful, but there just seems to be no fix as of now.   

 

PLEASE continue to post if you find an answer!!! I would be very grateful if you did and also anyone else having this problem, please post so maybe they will get it fixed!!! 

Thanks for posting!!! 

SLS454
Level 1

Changing default tax rate

Same problem here, I hate this setup. I have others who make Invoices along with myself and I have to go back every month now to fix this. No one else will take notice and I'm the only one it effects. I used to take me all of 10 mins to run the reports and pay. Now it takes hours. Thanks for the "inconvenience" Quickbooks. I could be spending my time accomplishing other things that consist with keeping a business up and running. I've been using Quickbooks since 2001 and I'm considering using another accounting software.        

 

UPDATE: 06/16/2021  Still not happy with Quickbooks, so I left them after 20 years. I went to Total Office Manager by Aptora. I call their office and get an actual human being and no run around, it's wonderful.

AliH17
Level 1

Changing default tax rate

I too am having problems with setting default sales tax. We mostly ship out of state or out of country, so I want to set the default to "exempt" but there is no place to set default to "exempt". Also, when we ship to someone in our state, it's charging them the tax for their "ship to" location rather than from our "ship from" location. 

 

For every sales receipt, I now have to enter a sales tax option from the drop down menu. I used to be able to set default to "out of state". Now it does not allow me that option. I am extremely annoyed, and considering looking into a different program. Hours wasted with customer service who were no help what-so-ever.

Rubielyn_J
QuickBooks Team

Changing default tax rate

Hi there, @AliH17.

 

Let me help sort things out for you.  

 

To start, let's set up your customer as a tax-exempt. If you're using the Old Sales Tax Center interface, here's how:

  1. Choose Sales at the left panel and then select the Customers tab.
  2. Select your customer and click Edit.
  3. Go to the Tax info tab in the Customer information window. 
  4. Ensure to remove the checkmark in the This customer is taxable box.
  5. Fill in the Exemption details and then click Save.

If you're using Automated Sales Tax, you'll have an option to exempt your customer from sales taxes. I'll show you how:

  1. In the Customer information window, go to the Tax info tab.
  2. Mark the This customer is tax exempt box.
  3. Input the Reason for exemption and the Exemption details.
  4. Click Save.

Also, The Automated Sales Tax feature in QuickBooks Online (QBO) calculates sales tax amount based on the state where you have nexus and are registered to collect sales tax, the physical address of your business and on the sales forms, the product mapping you've associated with the item you're selling, and the exemption status of your customer. Make sure you've set up the customer's Shipping address. This is to calculate the location of sale based on the address you're shipping from and to. 

 

To add up, QuickBooks shouldn't calculate the sales tax if the item is non-taxable or if you select the Out of State option. 

 

I've added this article for more information about the sales tax rate in QBO: Default customer sales tax rate in QBO.

 

Leave a comment below if you have any follow-up questions. I'll be right here to answer them. Have a great day.

bugg2844
Level 1

Changing default tax rate

I am also stuck with this situation.  In South Carolina, accommodations are taxed at a different rate than other items.  In my county it is 7% to the state and 3% to the county; normally sales tax is 6%.  I am unable to set the tax rate for my accommodations items to 10%.

AlexV
QuickBooks Team

Changing default tax rate

Good day, bugg2844.

 

I understand that you want to set up a custom rate for your accommodation items. 

 

QuickBooks Online uses automated sales tax. It automatically calculates taxes based on where you sell, where you ship, and what you sell.

 

All we have to make sure is that the details when recording a sales transaction are correct. Please click this link to learn more about how QuickBooks makes each sales tax calculation accurate.

 

Also, here are some of the article you can check for your reference:

I'll be here if you need anything else. Wishing you all the best!

bugg2844
Level 1

Changing default tax rate

Yes, but it is calculating it wrong.  The rate is 10%.  Quickbooks is calculating 6%.

 

Joesem M
QuickBooks Team

Changing default tax rate

I appreciate you coming back to us, @bugg2844.

 

Allow me to jump in for a moment and help make sure this gets sorted out.

 

You'll want to use the USPS Zip Lookup Tool. This tool gives you a Zip + 4-digit code that can validate your address to ensure the complete accuracy of the tax amount collected.Let me show you how.

 

  1. Go to this link: https://tools.usps.com/go/ZipLookupAction_input
  2. Select the Find by City & State button in the middle.
  3. Enter the City and the State then click on Find.
  4. In the results, you will see the correct zip code to use.

 

Check out this article to learn more about the verifying correct addresses for your tax filings: Validate an address for taxes.

 

However, if the calculation is still incorrect, I recommend you proceed with contacting our QuickBooks Support Team. One of them will be able to take over and provide further assistance regarding your sales tax concern.

 

Here's how to reach us:

 

  1. Sign in to your QBO account and click on Help.
  2. Click on the Contact us link.
  3. Enter your concern and click on Let's talk.
  4. Choose either Start messaging or Get a callback.

 

Due to COVID-19, we have limited support and reduced our support hours too. To make sure we address your concern on time, you can check their work schedule in this article: Support hours and types.

 

Also, you can run the Sales Tax Liability report to view your sales tax info anytime. This will make sure everything is accurate before you file and pay your sales tax return.

 

Know that the Community and I are here to help with anything you need. You can always share your concerns here. I'll make sure to get back to you. Happy weekend.

Marys2
Level 1

Changing default tax rate

We have to subscribe to a whole other service to determine sales tax rates.  Quickbooks does not determine any special taxing districts.  I would definitely not trust that they correctly determine the sales tax rates by location.  And remitting the tax is a whole other nightmare.

info119
Level 1

Changing default tax rate

Agreed! This 'accurate' tax calculator Quickbooks is using is absolute garbage. We live in a county that is higher than the rest of the state and last month Quickbooks decided to switch our tax rate without us doing anything and now we have to go back through and fix all of the previous invoices. Not only that we also have to click a drop down box to pick the correct sale tax. Just one more 'extra' step for the entrepreneur, thanks Quickbooks!

bpmarine
Level 1

Changing default tax rate

Not allowing your customers/business owners to select select their own default tax rate is EXTREMELY problematic and frustrating. Due to the implemented changes I have to spend extra hours every day fixing invoices and my monthly sales tax filing take exponentially longer as well.

I run a local service company and your "based on location" default tax rate is not applicable to this kind of business at all. Not only does Quickbooks attempt to use my customer's billing addresses (most of whom visit from out of state and use my services locally) for the tax rate, rather than the local tax rate (since service occurs here!), but every time I include a part in my service, meaning the entire bill should be taxable, the default tax rate does NOT APPLY TAX TO THE SERVICE PORTION OF THE BILL! This is a HUGE PROBLEM! So now, when I review my sales tax at the end of the month, I discover that I have collected too little from my customers to cover the sales tax I owe my state and local agencies and I am out the money. I do not appreciate this kind of "help" Quickbooks....please let me choose my own tax rate again.

I wonder how many other business owners this is happening to and they haven't even realized it yet, so they are just underpaying their taxes...

Please find a way to escalate this problem to whoever has the power to change this. I can't continue wasting extra time on a program that is supposed to be saving me time.

lakehouse7m3
Level 2

Changing default tax rate

How does QBO not understand retail business!  We don't get the address of our customers the majority of the time.  I want to set the DEFAULT tax rate in my accounting software and I can no longer do that???

F'ing insane!!!

lakehouse7m3
Level 2

Changing default tax rate

This is NOT SOLVED. 

If there is no way to do what we are requesting, the QB needs to fix the problem; not tell us that option doesn't exist.

lakehouse7m3
Level 2

Changing default tax rate

Understand this...we, your customers, do NOT want to have to set up a tax rate everytime we have a new customer.  We want to be able to set the DEFAULT TAX RATE so that this figure applies everytime we have a new customer and we DON'T have to set it.

I cannot understand why this is an issue; put the freakin option back so we can try to spend our time on our customers instead of our accounting software!!!!!!!!!!!!!

RFMobile2016
Level 1

Changing default tax rate

I was having issues with this too BUT I think I found the solution!!!!

 

When you open an invoice and scroll to the bottom where the tax rate is listed. The default will automatically show "based on location", I do not want this either as it only calculates 6% and my area we need 7%. 

Click on the small, blue words of "see the math" right underneath the amount shown for sales tax. It will bring up a side bar on the right that states "Customer tax details". You will want to click the pencil in the top right hand corner and either make this customer tax exempt OR select the appropriate tax rate for that customer, location, etc. This will save the tax rate you wish to calculate per customer/individual and shouldn't have to change it again (unless your location changes of course). 

 

You will have to manually do this on each invoice for each customer BUT you should only have to do this ONCE!

 

I hope this helps and answers your questions!

bpmarine
Level 1

Changing default tax rate

You are correct, this does work, but we shouldn't have to do this to get our accounting software to work correctly. It's not feasible for operations with thousands of customers to do this for each and every one.

TX Bookkeeper
Level 1

Changing default tax rate

TOTALLY AGREE -- THIS IS RIDICULOUS that Business owner, Accountants and Bookkeepers canNOT change the default Sales Tax Rate when it is TOTALLY OBVIOUS QBO does NOT!!! have a clue?!!  for TX, it just uses the STATE tax, but there's also "Local" or City or County tax added to the State Sales Tax that QBO did NOT take into consideration!   JUST another reason THIS bookkeeper DISLIKES (VERY close to HATING) QB Online!  

 

VERY FRUSTRATED WITH QBO!

TX Bookkeeper

ISpace
Level 2

Changing default tax rate

Hello, 
I came up with the same problem.  Most of our sales are "Out of State", and I want to set it up as a default option, but I could not.  Please advise.  

ISpace
Level 2

Changing default tax rate

I have the same problem.  I can't believe that QBO can not make this issue easier for customers.

ISpace
Level 2

Changing default tax rate

We are facing the same problem. 

ChristieAnn
QuickBooks Team

Changing default tax rate

Hi there, ISpace.

 

Welcome to QuickBooks Community. I'll provide further details on how QuickBooks automatically calculates the total tax rate for each sale.

 

You can either mark each customer as taxable or not or mark all of them as taxable at a default rate. If they are labeled as taxable, you can always choose which tax rate to apply to each customer. Differently, they will be taxed at a default rate. That said, QuickBooks Online calculates the tax rate based on where you sell and where you ship, the service or product's tax category, and the physical address of the business. With this, setting up the sales tax or calculating them based on "Out of State" is currently unavailable.

 

I can see how this feature would be beneficial to your business. Rest assured, I'm taking note of your suggestion for future enhancements. I suggest visiting our QuickBooks blog to know more about the latest updates in QuickBooks Online.

 

Please refer to the articles below to see further information about how QuickBooks calculates sales tax:

 

 

If there's anything else that you need help with, please don't hesitate to leave a reply or post again. Take care!

egroeg
Level 1

Changing default tax rate

It seems as though many are going in circles attempting to explain the issue to Quickbooks Team.

I share the same frustration as many others:  Short Term Rental Tax here in San Antonio has neither correct agencies, nor correct rates in the software.  I'm not able to add an agency, nor a custom tax rate.

It's lunacy that I must mark items non-taxable in order to complete a task that it appears non-us versions of the software do well.  

Shoplady2
Level 2

Changing default tax rate

Don't bother, tech support does not have the knowledge or capability to help you!  I have spent HOURS on the phone with tech support and NO ONE has yet to come up with a solution!  I am based in Florida.  We are in the service industry business at a FIXED location.  My customers come to ME!!!!!!  It does not matter what my customers address is PERIOD!  I pay taxes on where my services were performed (which is a fixed location), so the "based on location" addition has thrown a major wrench in my tax liability report!  The report is ALWAYS wrong!  One technician suggested I hire an Accountant (SMH), another tech said it must be "user error" (LOL) and another tech blamed the software engineer (BINGO)!  That's why QB can't help us,  becuase they refuse to go back to the drawing board and REALIZE that not EVERY business "ships" things or offers a  "mobile" service!  I am BEYOND frustrated and have yet to see a change!  I tried to change every customers tax rate manually (THOUSANDS) to a custom rate that I created in my Tax agency located in QB, but htat didn't work.  Doing my sales tax used to take me minutes to do, now it takes over an hour!  I have to run a profit and loss report and 1 by 1 go through each line to see which things I need to pay tax on!  This isn't easy since in FL some labor is taxable and some aren't (according to whether a part was involved).  If QB doesn't fix this I will be changing to another accounting software.  This sucks since I have been a faithful customer since the 1990's!

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