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bloodstainedmen
Level 3

Sales Tax Center - Record payment of return, expense account, bank feed?

Hello all,

 

I'm keeping the books for a small nonprofit. We started selling very small amounts of merchandise in our ecommerce store back in November.  I have until recently been figuring sales and use tax liability by hand, figuring/filing/paying without QBO help, since I did not yet have the paypal-wix-QBO integration nailed down and I did not have the product list set up correctly. That's fine, I'm just going back now to get it all sorted so we can file the 2019 IRS filing.

 

Now, I've successfully gotten our product list, inventory, COGS, income account, sales receipts, everything is set up as desired. I have our sales tax agencies configured for CA and IL, so taxes are being tabulated on sales receipts as expected, extending back to November.

 

Now, on the "Taxes > Sales Taxes Due" screen, I see that there are three "overdue" sales tax returns.

 

First, there is the matter of California sales tax. For whatever reason, CDTFA has assigned the organization a "Fiscal Yearly Reporting Basis." This is, quite obviously, an annual filing. However, QBO is showing an incorrect tax period from january to december and an incorrect due date, "was due January 20th." This is simply not true. The period is from Jul 1 to Jun 30. How do we fix this?

 

Then there is the matter of the IDOR period from October to December 2019. It was, as I mentioned, simple enough to figure sales and use tax by hand. I paid and filed already in January 2020. There were $2.00 of sales tax and $8.00 of use tax. I paid this tax electronically with our checking account through the IDOR portal, so the agency and the nonprofit are all square.


Trying to resolve the "overdue" IDOR return now in QBO.... First problem... I hit "view return," and make an adjustment for a $0.30 payment roundoff. This posts to an income account of my choice, however, there is no way to change the date of the adjustment. WTF? The adjustment needs to hit the books in January. Not now. How do we fix this?

 

Next, we come to the "record payment" prompt. It allows me to choose the bank account, but after doing this, there is apparently NO way to go and tell which expense account this payment is hitting. Doesn't seem to be any way to edit this recorded payment from a register in the way any other ole transaction would be editable. I would also need to match this payment to the transaction that came through on the bank feed. But... WTF?! These recorded payments arent in the slightest bit editable except for full deletion. I can't imagine that there is no way to control which expense account the tax payment is hitting.

 

Finally, how to handle the use tax we owe this agency on the same filing? It isn't captured by the sales tax calculations. Add an adjustment? How to split this correctly along sales tax and use tax lines?

 

Oh! And another thing! No option to add a class to that sales tax payment. How am I supposed to do my accounting and have a decent statement of activities if I can't classify the sales tax expenses under the merch program class?

 

I'll buy an ice cream cone for whoever can figure this one out!

3 Comments 3
AlcaeusF
Moderator

Sales Tax Center - Record payment of return, expense account, bank feed?

Welcome to the Community, @bloodstainedmen.

 

Let me share some information about the sales tax feature in QuickBooks Online.

 

The due date of the sales tax will depend on the agency's filing frequency. I suggest running the Sales Tax Liability report to check and verify the information.

 

Here's how:

 

  1. Go to Reports menu, then enter Sales Tax Liability Report in the search field.
  2. Select the correct date in the Report period drop-down list. 
  3. Click Run Report
  4. Go to the Taxable Amount column and click the amount to see the details.
  5. Review all the transactions.

To check the filing frequency:

 

  1. On the left panel, click Taxes and go to the Sales Tax tab.
  2. Select the Sales tax settings link in the upper-right hand corner.
  3. Look for the tax and click Edit under the Action column. 
  4. Select the correct filing frequency and click Save.

Right now, you can only change the payment dates in QuickBooks. For the adjustment, the system currently follows the actual date you made the sales tax adjustment.

 

Once you charge customer sales tax and pay the collected amount, it posts the transaction to the default sales tax accounts in QuickBooks. It will also depend on whether you are keeping your books on a cash basis or an accrual basis.

 

I suggest working with our QuickBooks Support Team to guide you further with the process. They have the tools to help you out and resolve the issue as quickly as possible.

 

You can reach them through these steps:

 

  • Click the Help icon at the top to open the Search window.
  • From there, scroll down to choose the Contact us button.
  • Input the issue /topic in the field box and then tap the Let’s talk option.
  • This will lead you to the contact information window.
  • Pick how you want to reach out to our support team: Chat or Get a callback.

I've also included some articles in case you need some ideas about sales tax in QuickBooks:

 

Let me know in the comment section below if you have any other questions. Have a great day ahead.

bloodstainedmen
Level 3

Sales Tax Center - Record payment of return, expense account, bank feed?

Hello Alcaeus, thank you for the reply.

 

The due date of the sales tax will depend on the agency's filing frequency. I suggest running the Sales Tax Liability report to check and verify the information.

Yes, the due date is set by the agency, but what I am telling the community is that the QBO interface does not offer any way to select which of the various CDTFA filing bases is applicable. Please refer to Capture1-taxperiod.PNG attached to this post. A January start of tax period is hard-coded into the tax settings with no way to adjust. This is broken.

 

Right now, you can only change the payment dates in QuickBooks. For the adjustment, the system currently follows the actual date you made the sales tax adjustment.

Then the feature is only half-implemented and needs to be fixed.

 

Once you charge customer sales tax and pay the collected amount, it posts the transaction to the default sales tax accounts in QuickBooks. It will also depend on whether you are keeping your books on a cash basis or an accrual basis.

It posts a transaction that is missing the ability to have the correct class applied. Also, can anyone speak to what is meant by "default sales tax account?" I have the Sales Tax Payable accounts, which the payment hits, and the checking account, which the payment hits, but again, it appears that the expense account needed is missing, to say nothing of the ability to split the payment across different expense accounts as appropriate (in this case sales tax and use tax).

Capture1-taxperiod.PNG

Jen_D
Moderator

Sales Tax Center - Record payment of return, expense account, bank feed?

Thanks for getting back to us and sharing your insights about the Sales Tax feature in QBO, @bloodstainedmen,

 

When you're using the Automated Sales Tax feature, the tax settings are preset based on the tax agency guidelines. Having the option to edit the original setup or change the tax period is still something our developers are working on. Any enhancements related to the Sales Tax Center will be downloaded automatically, and you will be notified through in-product updates.

 

On the other hand, the default Sales Tax account in QuickBooks is the liability account called California Department of Tax and Fee Administration Payable (Sales Tax Payable). When you create a taxable sale, the system creates a credit to the Sales Tax Payable account increasing your amount due.

 

The moment you pay the agency, it debits the payable account then credits cash or bank. The Sales Tax Expense account is not yet available for US versions since we currently don't apply tax on purchases.

 

Visit these links to learn more about Sales Tax processing in QuickBooks:

 

Let me know if you have any questions about this. I'm always here if you need further help. 

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