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.

Let me share some information on how to fix incorrect sales tax in QuickBooks, Lady.

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

Please note that when creating tax rates for Eureka residents in QBO, it's possible you select the wrong agency and associate it with the tax rate. In such cases, it is recommended to make the initial tax rate inactive and create a new tax rate that accurately corresponds to the correct agency.

In the meantime, you can create a journal entry. This will allow you to correct the error and keep your records accurate until you have created and applied the correct tax rate. However, we also suggest that you seek guidance from your accountant to ensure that you are choosing the correct account for the journal entry and that your records remain accurate. 

You can always run a sales tax liability report to see each tax agency, the taxable amount of sales, and the tax owed. Refer to this link for more information: Manage sales tax payments.

See the following article for detailed guidance in filing your sales tax return and recording your tax payments: File your sales tax return and record tax payment.

Additionally, you can visit these resources about handling tax rates and other relevant topics:

• Learn how QuickBooks Online calculates sales tax
• Use automated sales tax on an invoice or sales receipt
• Set up and use automated sales tax

Tag my name in the comment below if you have other questions about sales tax posted to the wrong accounts payable. I want to ensure you are taken care of.

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.

For future reference, you can check this article about running financial reports in QuickBooks Online to verify the recording of sales tax payments in your books for future reference: Run reports in QuickBooks Online.

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.

MelroseV

Maybelle_S

Kurt_M

My specific questions have not been address, answered or resolved.  Please read my last reply thoroughly - something is wrong with where the collected sales tax is posting to and I cannot find out where to make the necessary changes.

Managing posting accounts to your collected sales taxes is relevant when recording transactions in QuickBooks, LadyM1. Let me further share inputs about this.

As mentioned by my colleagues above, ensure you've allocated the correct posting account for the taxes collected in your Chart of accounts (COA).

If the transaction was created before the update or changes made to your COA, posting accounts will stay as it was and would require you to manually assign Payable Account for Mackinaw to the sales taxes for Eureka & Roanoke.

However, if these entries were made after the changes from the COA, this should reflect the posting entry to the appropriate account.

Additionally, if these transactions aren't reconciled yet and still shows the incorrect posting account, you may consider deleting the invoice entry and recreating them again. This way, invoices will be posted to the right account.

Otherwise, you may consult your accountant first if these entries were already reconciled to provide professional guidance in handling your transactions.

I've also included this article that may come in handy in the future to help you pay and file your state and local taxes: Pay and file payroll taxes and forms in QuickBooks Online Payroll.

Just keep me posted on this thread if there's anything else you require additional assistance with when managing taxes in your account. Keep safe and have a good one.

FateCandyLaneT,

I have 4 municipalities in which we sell products. We collect sales tax in ONLY two of them

Eureka 3% tax

Roanoke 5% tax

Deer Creek 0% tax

Mackinaw 0% tax

Prior to Sales Tax Settings changed, each one of those municipalities had a corresponding Payable account to which the collected tax was mapped, if any was collected.  Eureka tax mapped to Eureka Payable and Roanoke tax mapped to Roanoke Payable.  Deer Creek & Mackinaw had Payable accounts to, but since NO tax is collected, nothing mapped to these accounts which is correct.

All of these accounts were set up prior to implementing Sales Tax Settings updates.

As of 9/1/24, some Eureka & Roanoke taxes are now mapping into the Mackinaw Payable account which is completely inaccurate and unacceptable.  

As of 10/1/24 ALL Eureka & Roanoke taxes are mapping into the Mackinaw Payable account, even though the sales & customer is correctly located in Eureka or Roanoke.

As of today, EVERY new sale I create in Eureka or Roanoke, the sales tax is mapping to Mackinaw Payable - this is inaccurate.

Please tell me step-by-step how to change the mapping of sales tax to Payable accounts.  I created 1600+ recurring invoices every month and correcting them after the fact is unacceptable.  Using a journal transaction to correct on a monthly basis this is also unacceptable.  Deleting and recreating each invoice is also unacceptable and not a long-term solution since these invoices recur EVERY SINGLE MONTH.

I need QBO Support to IDENTIFY how to fix the mapping of sales tax to payable accounts for me ASAP.

I wish you didn't have to face all these hurdles with your sales taxes in QuickBooks Online (QBO), LadyM1. I'll make it up to you by making sure you get the best help available so this gets sorted out right away.

To review this further, I suggest contacting our live technical support team since the Community is a public forum and we'll need to collect some personal information to help you pull up your account. They're also equipped with the necessary tools to perform a screen-sharing session to investigate this matter. 

Here’s how:

1. Log in to your QuickBooks Online (QBO) account.
2. Click the ? Help button at the top right corner.
3. Go to the Search tab, then enter your concern.
4. Select Contact Us and pick a topic to connect with the right expert.
5. Choose a way to connect with us.

If you need to check how much sales tax you owe, you can run the sales tax liability report to help make sure that everything is accurate before you file your return to your tax agency.

Please touch base with me here if you have other questions or concerns about your sales taxes. I'll be around to help you in any way I can.

Kevin_C,

I reached out last week to a QBO live support person and spent 90 minutes on the phone during which:

• the "support" person not understand the issue
• offered 0 solutions
• would not refer me to a more knowledgeable support person

How do I connect with a person who has specific knowledge in this specific topic and will actually understand the issue?

I am having the same problem. NYC sales tax is being recorded in my Rockland County Sales Tax account.  Taxes are being calculated at the correct rates but not landing in the correct account. How do I change the account the sales tax is landing in?

Hi there, QU1. I'm here to share information about taxes calculated correctly but posted to the wrong account.

I've checked our records and noticed that other users have also reported the same issue regarding taxes being calculated correctly but credited to the wrong account. Our product engineers are currently looking into the root cause and working on a solution. In the meantime, I recommend reaching out to our Customer Care Team. They can add you to their notification list and keep you updated on the investigation's progress.

To reach them, click the ? Help button at the top-right corner and select Contact Us to talk with a live agent. Ensure to review their support hours to know when agents are available.

In case you forgot to add sales to an invoice, you can check out this article on how to correct your invoices: Correct invoices created without sales tax in QuickBooks Online.

If there's anything else I can assist you with in managing sales tax in QBO, please let me know, QU1. I'm here to help!

Hi there!

Here's what I've learned since I originally posted my question on this issue:

• No QB-affiliated person responding to these threads knows how to solve this issue.  Instead, the vast majority will suggest solutions that have nothing to do with the problem.
• MirriamM (Moderator) is correct in saying that multiple users have reported this situation and product engineers are investigating.  I am one who reported and I have a case ID 15124920161.  I recommend contacting QB directly via chat or phone call, explain this problem to someone and insist on opening a case or asking them to tag you on my case, if that's a thing they can do.
• There should be an easy way to correctly select which account the tax payable is mapped to in some sort of cooperation between Sales Tax Settings & Chart of Accounts, but  neither I nor anyone QB-affiliated could locate such a thing.  Nobody in support could fix it - it likely has to be corrected in the software.
• In the meantime, I have to use a journal entry to debit the wrong Tax Payable account and credit the correct Tax Payable account.  Frustrating yes, but it does "correct the books."

Good luck!

I received an email from Quickbooks Care Team pn 11/8 saying the issue I'm having which created case 15124920161 is resolved and working as designed.
This is 100% not true. The transition to Sales Tax Center & Settings has destroyed proper accounting for the multiple municipalities we pay tax to. Sales Tax Center forced me to choose Illinois Department of Revenue as the Tax Agency (which is incorrect, the tax is collected in and remitted to individual municipalities), and now the taxes collected for 2 different municipalities are collecting under only one municipality (one that doesn't have a tax collected) and I have to manually sort out every transaction to calculate & remit tax to the correct municipality. Moreover, now I have to add 2 more towns to our municipalities and I see no way to do so.
I am therefore requesting to be contacted by a person *fluent* in the Sales Tax Center within Quickbooks Online to resolve my issue with me. 

Thanks for getting back with the Community, LadyM1.

If you've received an email advising a case on your account has been resolved, but the sales taxes the case was about still aren't functioning as they're set up to, I'd recommend continuing to get in touch with our Customer Care team and reference the case number.

They'll be able to pull up your account and the case in a secure environment, conduct further research with you, and create an investigation ticket if necessary.

In regard to adding new locations you collect sales taxes from, your steps will be different depending on which process you're using:
 

• Our Set up your sales tax article covers how to add new agencies if you collect taxes manually.
• The Set up where you collect sales tax article covers how to add new agencies if you're using your Automated Sales Tax feature.

Please don't hesitate to send a reply if there's any additional questions. Have a great Wednesday!

Is there a way to return to Manual Sales Tax settings?  This Automated Sales Tax setup is terrible!

For example, when one sets up the Automated Sales Tax settings, one is forced to choose an agency from what is listed there.  I cannot create an agency from scratch.

So I did what the QB agent told me to do and chose Illinois Department of Revenue. But I don't remit taxes to IDR - I remit directly to the municipality.  Can this be undone?

What happens if I choose "Make Inactive" on the Tax Agency currently selected?  Can I then start over and create my own custom agencies?

Adjusting to new features can be a little tricky at first, especially when you're trying to ensure compliance with various tax agencies, LadyM1. Rest assured, I'm here to address your questions and offer clarity on the Automated Sales Tax feature in QBO.

First, there's no option to go back to the old tax settings. As part of our efforts to streamline and improve our services, all existing and new accounts have been migrated to the automated setup. This change is permanent and applies across the board to ensure consistency and up-to-date tax calculations for all users.

Second, QBO will no longer calculate sales tax when a state agency is marked inactive. You'll need to make it active again to make sure that there's sales tax when creating transactions.

Just go to the list of tax agencies and click the Make active link under the Action column.

Aside from that, we're also unable to start over or create custom state agencies. As a workaround, you'll want to process the payment directly to the municipal tax agency through their website or file by mail. Then, record the transaction in QBO using these steps:

1. Go to the Taxes menu and proceed to the Sales tax tab.
2. Find the return you just paid, then click View Tax Return.
3. Select a filing method and choose Record payment.
4. Enter all required details and click Record payment once again.

I'd also like to guide you on how to submit an official feature request about making some changes to the Sales Tax feature. You can send them directly from your QBO account. Let me share this article as a guide: How do I submit feedback?

Customer feedback is instrumental in shaping new features that could address the challenges you and others are experiencing. We're grateful for your understanding and support as we work to enhance our platform.

To further assist you with tax-related matters, I'd like to recommend two other resources that can be useful in your future tasks:

• Edit sales tax rate in QuickBooks Online
• Default customer sales tax rate in QuickBooks Online

I want to reassure you that we're always at your disposal. Whether you're dealing with transaction entries, sales tax collection, or customer management, we're here to provide guidance when you need it.