Credit Memo -- Sales Tax Involved

Name · ‎October 17, 2017

A good customer didn't pay their sales tax. We're letting it go.

A want to do a credit memo, to match up their payment.

Should I just credit fees?

I don't want to mess up the sales tax reporting, etc.

We've already filed the sales tax (we paid).

Thank you!

SBC_INC · ‎October 19, 2017

We just went through a Sales Tax audit: To ensure compliance with Sales Tax remittances in your jurisdiction, my advice is to mark down the RETAIL price directly in the invoice so that your QB software can recalculate the proper sales tax due. Since you already remitted the higher sales tax, this adjustment will reduce your future sales tax liability and all will be well if you are ever audited.

You can always put a note inside the invoice to this effect (to preserve the history of the invoice) for future on-lookers.

View solution in original post

vivianethompson · ‎October 17, 2017

You can issue a credit memo which will be associated with an item called "bank charge" or "bad debt". You can also pay the invoice in full, send the payment to Undeposited funds.
Then, in the Make Deposit window, pull in the payment and, in the lower section, minus the missing amount, using bank service charges in the From account field or bad debt.

SBC_INC · ‎October 19, 2017

We just went through a Sales Tax audit: To ensure compliance with Sales Tax remittances in your jurisdiction, my advice is to mark down the RETAIL price directly in the invoice so that your QB software can recalculate the proper sales tax due. Since you already remitted the higher sales tax, this adjustment will reduce your future sales tax liability and all will be well if you are ever audited.

You can always put a note inside the invoice to this effect (to preserve the history of the invoice) for future on-lookers.

203400 · ‎October 12, 2022

I can't delete/void an invoice for a cancelled order because it was created on the closed period. Is it okay to create a credit memo to close the invoice? Will this affect Sales Tax?

Giovann_G · ‎October 12, 2022

Hello, 203400.

Your company's accounting records and tax liabilities are secured for that fiscal period when the accounts are closed at the end of the period. The information for the closed period will change if you edit or void the transaction.

The invoice generated during the closed period may be closed with a credit memo. However, the date should be in the current period. This will maintain the accuracy of the accounting data throughout the close period because sales tax is calculated based on the date entered.

Here's how:

Go to the Customers menu.
Select Create Credit Memos/Refunds.
Choose the customer from the Customer: Job dropdown.
Complete all the required fields and include the item you're giving credit.
Once done, hit Save & Close.

Next, apply the credit memo to the open invoice using the Received Payments. I'll show you how.

Go to the Customers menu.
Select Received Payments.
Choose the customer from the Received From dropdown.
Leave the payment amount to zero.
Click the Apply credits.
Checkmark the invoice wanted to apply the credit.
Hit Done, then Save & Close to save the payment.

If you're unsure which date to affect the tax, I advise getting in touch with an accountant.

I've included this article to assist you if you have to refund or credit customers in the future: Give your customer a credit or refund in QuickBooks Desktop for Windows.

You can count on me if you need anything else. Have a great day.

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Credit Memo -- Sales Tax Involved