Handle sales tax increase as a Cash Basis Company

Hi there, @TBM.

Welcome and thanks for posting in the Community. I can share some information about how to handle sales tax increase in QuickBooks Desktop (QBDT).

To start off, changing the sales tax rate won't automatically adjust or calculate the tax due on the report. This will only take effect moving forward. If your customer pays with the new tax rate, you can toggle the sales tax on the invoice first to match the payment.

Here's how:

1. Go to Customers menu at the top and pick Receive Payments on the drop-down.
2. Select the Customer on the Received From field, then enter the Payment amount.

3. Check the box beside the transaction and double-click to open the invoice, then toggle the sales tax.

4. Hit Save & Close, then Yes.

5. Click Save & Close again to receive the payment.

On the other hand, you can also make an adjustment when paying the sales tax due with the new rate. Here's how:

1. Go to the Vendors menu at the top, then pick Sales Tax and Adjust Sales Tax Due on the drop-down.

2. Enter the necessary information and make sure to select an expense account in the Adjustment Account drop-down since the amount to be paid is higher than amount collected in QB.

3. Choose Increase Sales Tax by and the amount, then hit Ok. 

For additional information, check out these articles for further guidance:

• Record a payment for an invoice.
• Process sales tax adjustment.
• Handle cash basis sales tax.

That should you get you pointed in the right direction. Please let me know how it goes or if you have any follow-up questions or concerns. I'll be happy to help. Have a great rest of the day.

This really doesn't apply to my question. Once I  change the sales tax from 6% to 7% we will have invoices that are still outstanding that were charged prior to the increase. When these customers pay their invoice they will not be paying the additional 1%. They will only be paying the 6% sales tax that they were billed for prior to the increase. 

When we go to pay our sales tax to the state, they calculate the amount we owe based on the new rate. However, we will have some invoices paid at 6% and some at 7%.  

This really doesn't apply to my question. Once I  change the sales tax from 6% to 7% we will have invoices that are still outstanding that were charged prior to the increase. When these customers pay their invoice they will not be paying the additional 1%. They will only be paying the 6% sales tax that they were billed for prior to the increase. 

When we go to pay our sales tax to the state, they calculate the amount we owe based on the new rate. However, we will have some invoices paid at 6% and some at 7%.  

This really doesn't apply to my question. Once I  change the sales tax from 6% to 7% we will have invoices that are still outstanding that were charged prior to the increase. When these customers pay their invoice they will not be paying the additional 1%. They will only be paying the 6% sales tax that they were billed for prior to the increase. 

When we go to pay our sales tax to the state, they calculate the amount we owe based on the new rate. However, we will have some invoices paid at 6% and some at 7%.  

Hello again, TBM,

Thanks for providing that clarification.

Upon pulling up the report, the updated rate will show up. However, if you drill down on the specific transaction, the tax rate that is being used is the original tax rate that was applied when creating the transaction.

You can open the Transaction Detail report for more information. Here's how:

1. Click Reports at the top menu.
2. Select Custom Reports.
3. Click Transaction Detail.
4. In the pop-up window, set up the information that you'd want to display.
5. Click OK.

I'm just a few clicks away, if you have further questions. Have a great day!

MirriamM, 

I understand the rate is what was billed. I guess what I am trying to find out is what adjustments I will need to make when I pay the sales tax in Quickbooks. When we actually pay the state the sales tax due it will all be at the 7% rate even though we have invoice payments for the 6%. We will have to cover this difference but not sure how to enter in Qb