Sales Tax using Avalara

Let's figure out the cause of the credit memo that shows zero amount and fix it to keep you going with your task, RCP7.

Since you made the credit memo before you changed your customer to tax-exempt, it shouldn't be zeroed out. But we can fix it by looking at the Tax section in the credit memo. Doing this will make sure that any sales tax that was collected will be returned to the customer.

 Here's how:

1. Select Sales from the sidebar menu.
2. Go to the Customers tab, then select the appropriate customer.
3. Locate then click the credit memo.
4. Put a checkmark under the Tax column.
5. Click Save and Close, then select Yes to confirm the changes.

Once done, you can now perform the Receive payment using the credit memo that you've created. Let me share these articles for more details on how to record a refund or apply a credit memo: 

• Create and apply credit memos or delayed credits in QuickBooks Online
• Record a customer refund in QuickBooks Online

Also, we can check the Audit Log to see if anyone made any changes to your credit memo that resulted in zero amount. For more details about using this feature, open this article: Use the audit log in QuickBooks Online.

Additionally, you'll want to open these resources that will guide you in recording your deposits and how to reconcile your account to make sure the amounts match your real-life bank and credit card statements. 

• Record and make bank deposits in QuickBooks Online
• Learn the reconcile workflow in QuickBooks

Should you have any other concerns or follow-up questions about your sales tax, you can always find me here. Have a good one.

Thanks for the quick response. Unfortunately, since the customer is no longer "taxable", the tax does not show up on the credit memo even if that box is checked. I attached a screenshot of the Credit memo line items. Line 3 typically calculates out the tax via Avalara and adds it automatically to the invoice/credit memo but since they are tax exempt, that line is showing up as $0. If we check the box to make them taxable, the new invoice will have tax reapplied to it which we do not want to happen. 

I appreciate your quick response, @RCP7. We can handle this situation efficiently by manually overriding a line item amount in your credit memo transaction, and I'm here to walk you through it.

Based on the screenshot you attached, you can leave the tax column unchecked for the Sales Tax line item. Then, you can manually input the tax amount in the AMOUNT (USD) column. This way, you don't need to edit the customer to enable taxable or enable the tax checkbox in the Tax column.

Furthermore, you can also consider adding a discount to an invoice or sales receipt in QuickBooks Online for your loyal customers.

Let me know if you need additional assistance in refunding your customer via credit memo. I'm always here to assist you.