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Posting transactions to Tax Liability account

When I try to post an expense to my Department of Revenue Liability account I get an error message that says "You have either selected a tax liability account on a transaction where it's not allowed, or haven't specified a tax rate to go along with it."

It is an ACH type transaction.

1 Comment
QuickBooks Team

Re: Posting transactions to Tax Liability account

Hi there, Valeria Kennelly.


Thank you for posting here in the QuickBooks Community!


You are getting this error because QuickBooks will not allow you to post the sales tax payments to Expense. You have to manually record the sales tax payment in QBO and match them.


Let me show you how:

1. On the left panel, select Taxes.
2. Select the tax agency you're recording the payment for in the Sales Tax Owed list.
3. Choose Record Tax Payment.
4. Fill in the following specific information:


  • The bank account you're making the payment from.
  • The payment date.
  • The ending date for the tax period.
  • The amount of the tax you're paying.
  • To make an adjustment to the amount, select Make Adjustment and enter information about the adjustment.
  • Any notes about the payment you want to make.

5. If you don't want to print the sales tax check, select Record Tax Payment.
6. If you want to print a check for the payment, check "Print a Check"and choose Record Payment and Print Check. This sends the check to your Print Checks queue where you can then select the check and print it.


Once done, you can now match the ACH payment from the bank to sales tax payment in QBO.

Please check this article for more information about how to record, adjust and delete sales tax payments in the Sales Tax Center: Manage sales tax payments.


Also, please refer to this article for matching and adding transactions in QuickBooks Online: Add and match downloaded bank transactions [Video].

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.