Sales tax collected is posting to wrong payable account - how to fix?

We'll provide details and help you correct the posting account for collected sales taxes inside QuickBooks Online (QBO), @LadyM1.

You'll need to locate the payable inside the Chart of accounts to review the register and correct the posting account for those collected sales taxes. We'll outline the steps to get you going:

1. Access your QuickBooks Online company.
2. On the left navigational bar, click the Transactions tab and then select Chart of accounts.
3. Locate the account where sales taxes are posted.
4. Click the View register below the Action column. Verify the transactions and then when you're ready, click on them manually.
5. Select the Edit button and then in the Transfer Funds to field, choose the account where you want to transfer the sales taxes.
6. Complete the necessary information of the transfer.
7. Once done, click the Save and new or Save and close button.

If you're unsure which category to choose, it's best to work with an accountant. They can help you determine the best way to handle your situation. If you don't have an accountant, I can help you find one. Feel free to visit this page: Find a QuickBooks ProAdvisor.

On the other hand, you can refer to these handy articles to help you manage sales tax setting and learn more about sales tax adjustments inside QBO:

• Set up your sales tax in QuickBooks Online.
• Create or delete a sales tax adjustment in QuickBooks Online

Suppose you have other questions related to QuickBooks or further assistance in correcting the posting account of the collected sales taxes. Feel free to visit us or comment below. Rest assured, our team will always be around to respond as soon as possible. Keep safe.

Kurt,

Thank you for your reply, but so far it is not helpful.

I got through part of Step 5 (clicked Edit button), but this leads to the customer invoice and I do not see any “Transfer Funds to” field to transfer the sales taxes.

Moreover, you can see on the attached screenshot that QBO has created many $0.00 transactions for customers who purchased non-taxable services.  These $0.00 transactions should not be showing up AT ALL, and also should not be showing up in the Mackinaw …Payable liability register since those customers are properly registered/located in different towns. ALL my 1600+ October invoices are routing or showing up in Mackinaw Payable and actually NONE of them should show up there as no taxes are collected at all in Mackinaw.

I'm here to share some information on how to fix incorrect sales tax in QuickBooks, Lady.

QuickBooks Online automatically calculates the total sales tax rate base on your customer's sales tax-exempt status, the location where you sell/where you ship, and your service or product's sales tax category. The total sales tax rates are the sum of state rates and local rates, including the city, county, and/or district rates.

We can create a sales tax adjustment to record credit to match the sales tax payment. To do this,  you'll need to create an account for the adjustment. 

You can set up an income account if you want to decrease the amount due, or an expense account if you need to increase the sales tax due. I'd also suggest consulting an accountant in order to choose the appropriate account and detail types. 

Once verified, you can follow these steps below:

1. Go to the Gear icon, then Chart of accounts.
2. Click on New.
3. Choose Income or Expense from the Account Type drop-down.
4. Select the account's Detail Type.
5. Name you adjustment account.
6. Click on Save and Close.

After that, go to the Sales Tax tab to add an adjustment. Here's how:

1. Go to Taxes from the left menu, then Sales Tax tab.
2. Locate the tax period you need to adjust and hit View return.
3. Tap Add an adjustment.
4. Select the Reason for the adjustment.
5. Choose the Account for adjusting sales tax.
6. Enter the adjustment amount.
7. Click Add.

Here's an article for the detailed instructions: Create or delete a sales tax adjustment in QuickBooks Online.

I'm also adding this link in case you need help managing sales tax. It contains topics with articles to guide you along: Manage taxes in QuickBooks.

Please let me know if you have other questions or concerns with taxes. I'll be around to help.

Quickbooks Team,

You are not addressing the core issue: how do I figure out how/why the sales tax for Eureka & Roanoke are posting to the Payable Account for Mackinaw?  This should not be happening and it didn't happen until Quickbooks implemented new sales tax settings.

If I don't figure out how to correct this incorrect flow of sales tax to the wrong payable account, this will repeat itself on a monthly basis for the 1600+ invoices I have set up to recur.

Quickbooks is calculating a Eureka sales tax for a customer located in Eureka, who buys product in Eureka and is posting that tax into a payable account for a non-taxing municipality (Mackinaw).  How do I fix this?

I appreciate your efforts to fix your sales tax, @LadyM1. Let me help you with this.

The possible reason why your sales tax was recorded in a different country is that you used the Automatic Calculation feature when creating your invoice.

To fix this one, we can edit your invoice and manually change it to Eureka sales tax. Allow me to guide you on how to do it:

1. In the left navigation panel, select Sales.
2. Click Invoices.
3. Choose the invoice you want to change the sales tax.
4. Select Edit.
5. Click the Automatic Calculation drop-down in Select tax rate.
6. Tick the Eureka sales tax.
7. Select Save and close.

If you didn't set up any Eureka sales tax, you can manually create it by selecting the + Add rate in the Select tax rate.

Don't hesitate to return to this platform if you have other questions about your sales tax in the software. We're committed to addressing all inquiries and ensuring your QuickBooks experience is smooth and efficient.

I do have the correct sales tax rate selected. I followed your steps to edit the invoice and (again) select the correct tax rate & saved.
The taxes charged is still mapping to the incorrect payable account. See photos to support.