You have either selected a tax liability account on a transaction where it's not allowed, or haven't specified a tax rate along with it

Thank you for joining us here in the Community, @lburke88.

The possible reason why you’re getting this error is because the account type connected with your bank isn’t credit card or bank category. I’d be glad to show you how to review and edit the account type.

1. Go to the Transactions menu.
2. Select Banking.
3. Click the drop-down menu ▼ and select the bank account.
4. Click on the pencil icon ✎.
5. Choose Edit account info.
6. Click the drop-down menu ▼ under the Account Type and select either Bank or Credit Card.

 After reviewing the account type, you can refer to the articles below:

• Manually create sales tax
• Payroll tax payments How you can review a transaction in your account register

Feel free to read this article if you have any other transactions to review in your register in the future: How you can review a transaction in your account register.

Fill me in if you have further concerns. I’ll be here to help. Have a nice day!

Unfortunately the account was already connected as a credit card.  Could I please have some other possible solutions?

Thank you,

Liam Burke

I appreciate you getting back to us and following the steps provided by my peer above, @lburke88.

Let's perform some troubleshooting steps to get rid of the error and get you back to working order.

To check if it's a data issue, let's try logging in to your QuickBooks Online (QBO) account via a private browser. There are times that the browser stores frequently-accessed data, thus causing websites, like QBO, to act weirdly.

To use a private browser, here's how:  

• Google Chrome: Ctrl + Shift + N
• Internet Explorer: Ctrl + Shift + N
• Mozilla Firefox: Ctrl + Shift + N
• Safari: Command + Option + N

If this works, it means that you need to clear your browser's cache so the system can start fresh.

If you get the same result while using a private browser, I recommend contacting our Phone Support Team. This way, they can further investigate this matter and provide additional troubleshooting steps to get this fixed.

You might want to read this article to learn how to manage your sales tax payments: Manage sales tax payments in QuickBooks Online.

Keep in touch if you need more help with your sales tax, or if there's anything else I can do for you. I always have your back and am always happy to help. Have a great day.

I'm having this same issue. I am unable to reconcile the payment each month when I update my actual bank information. I tried working through this by managing my sales tax payments, but when I go back to reconcile, it will not allow me to attach to the correct state liability account. Very frustrating as I have a list of tax liability payments that I can't reconcile.

Hey there, @JPS148.

Thanks for taking the time to follow along with the thread and sharing your concerns here in the QuickBooks Community. 

I recommend trying the suggested steps by my colleague, Mark, above. Using a private browser plays the same role as clearing the cache from your browser. Web browsers collect cache to save time when loading repetitive data and images. Over time these files can become outdated and corrupted, causing issues like not reconciling the payment each month.  

If using a private browser seems to work for you, let's go ahead and clear the cache of your browser. I've included the links for all supported browsers that contain the steps to clear the cache below. 

• Firefox
• Google Chrome
• Safari for Mac
• Safari for iPad and iPhone
• Microsoft Edge

After clearing the cache, please make sure to restart your browser so the changes can take effect.

If you're still unable to reconcile the payment, I recommend contacting our Support Team. This way, one of our support agents can review your account in a secure environment and investigate this matter further. You can use the link I've included below to connect with an agent. 

• QuickBooks Online Support

Please don't hesitate to let me know if you have any questions or concerns. Take care! 

I do use Firefox, and I do clear my browser often. Still doesn't help.

Thanks for the prompt reply, @JPS148. I'm here to ensure you can proceed with reconciling your transactions in QuickBooks Online (QBO).

In QBO, you can encounter that error message if you change a standard expense account to a sales tax liability account. Also, you're unable to record a bank transfer to a sales tax liability account. This conversion isn't allowed in the system. What you can do is create a new expense account for recording these payments or expenses related to sales tax.

Another option is to create a journal entry and match it to the bank transaction. Follow these steps to proceed:

1. In the first line, choose a liability account.
2. Enter the exact amount shown on the bank feed transaction under Debits.
3. In the second line, choose the bank account connected to the bank feeds.
4. Enter the same amount above the amount shown on the bank feed transaction under Credits.
5. Once done, select Save.

See this screenshot below as an example:

For the best advice on how you can record it, I recommend consulting your accountant. If you don't have one, no worries you can look for a Pro-Advisor near your area using our Find an Accountant tool.

Once done, you can now categorize and match online bank transactions in QuickBooks Online.

If everything's good with your transactions and accounts, you can now proceed to reconcile an account in QBO.

Please let me know if you have any other questions or concerns besides managing sales tax payments in QBO. I’ll be here to lend a hand. Have a good one!

Thank you! That was the exact problem. I did what you suggested and created a new Liability account for sales tax. Reposted the transaction to is and voila!