Having an issue with the Sales Tax Liability report. I live in Pennsylvania, and I do business in different counties. One county has a 1% sales tax, and the state has a 6% sales tax.
My Sales Tax Liability report appears to be calculating my state-level taxable amount based on a 6.3395% tax rate, which isn't correct. $4300 * 6% should be $258.
The county with the 1% sales tax is being calculated correctly in the report.
Can someone please explain how this is happening, and how I can fix it?
@bsean Despite how janky QBO is, you should still be able to double-click on any of the given amounts in the 6% line and get a report of the invoices QBO is sourcing to get to its totals.
The first thing I'd check there is whether one of the invoices has an amount similar to $243.33; this is the taxable amount necessary to create the $14.60 difference in calculated sales tax versus their sales tax total.
Second thing I'd check is if something's being sourced that ought not to be.
I think there's also some function in QBO that'll show you how they are arriving at their numbers.
In any case, until someone else comes along, that's all I have; in my experience, QBO's reports tend to be pretty terrible about accuracy and usability.
Maybe the support staff here can give you a good answer, but you're more likely going to be stuck until another QB user that does use QBO happens to stop by here.
Hello there, bsean. I'm here to clarify your concern about sales tax liability and provide a resolution.
One possible reason for the report discrepancies is the incorrect tax rate being applied to your sales forms. When you set up a tax rate, QuickBooks automatically uses the rate associated with the specified address. Did you create a custom rate of 6% for your state taxes? If so, this may explain the discrepancy.
To check the tax rate used for your sales forms, you can run the Sales Tax Liability report. Here’s how:
Additionally, you can refer to this article for instructions on emailing, exporting, and printing your reports: Run a report in QuickBooks Online.
Also, if you need help with managing your reports, I encourage you to visit our QuickBooks Live Expert Assistance website. Our knowledgeable experts are available to guide you through the process, ensuring your financial records are accurate and up-to-date.
If you have any further questions regarding your sales tax in QBO, please feel free to return to this thread, bsean. We're here to assist you in any way we can
Hi @JanbonN .
Thanks for the info.
I believe I'm using the automatic sales tax feature. I don't recall ever defining the 6% rate for PA.
I ran the report as you suggested, then clicked on Pennsylvania, and confirmed that all of my transactions for that quarter have 6% listed as the tax rate.
I also ran the main Sales Tax Liability report for different time periods (2025 YTD, and Q3 2024), and both of those reports correctly calculate the PA sales tax using 6%. I re-ran the report for Q4 2024, and it's using 6.3... % again.
I've cleared my cache as well, but that doesn't make a difference.
Any other thoughts?
Thanks for the info, @FishingForAnswers .
You were on the right track with your recommendation. I checked the invoices for Q4 of last year, and did the quick math to compare the taxable amount to the tax amount, and all of them were using 6% except one invoice. I dug into that one invoice (which has already been paid), and somehow it looks like QB did some kind of custom tax calculation just for that invoice.
I viewed the invoice, did the "see the math" option, and I could see that the all of the inventory items on that invoice had used a special tax value (but I couldn't find that number anywhere). I edited the sales tax for that invoice and clicked the "reset to original" button, which recalculated those items using 6% instead of whatever it was using before. Now when I run the Sales Tax Liability report, my numbers all come out correctly.
No idea how that one invoice got messed up, but it appears to be fixed now.
Thanks to you and @JanbonN for responding to my question.
@bsean Good luck with closing out the year; depending on what you actually charged that customer, you may want to make some adjustments in QBO.
If you did overcharge as a result of QBO's goofiness, there's usually an Excess Tax Collected line on sales tax returns.
No idea why it'd do the weird math, but it seems to do that pretty often. Something about customer addresses, maybe.
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