Turn off "Based on location" sales tax feature

Hello there and thanks for posting here in the Community space, redbigfoot.

QuickBooks Online calculates sales tax based on location using the criteria below:

• Your customer's tax-exempt status
• Where you sell and where you ship
• What you sell

This is the reason why it is impossible to turn off the Based on Location tax feature. It is performing as intended. You'll have the option to set up a custom rate as an alternative if the third-party program doesn't have this default function.

Here's how:

1. Open the Taxes menu.
2. Click on Sales tax settings.
3. From the Custom rates section, choose Add rate.
4. Click on Single or Combined.

Once done, you can manually select the tax rates from the Based on location dropdown on the invoices created from the other system. Feel free to visit this link for more details: Use custom rates to manually calculate taxes on invoices or receipts in QuickBooks Online.

I'm also including the following useful guides to assist you to keep track of and manage your reports in QBO:

• Run reports in QuickBooks Online
• Customize reports in QuickBooks Online

If have further questions about taxes, please let us know. We're available to help you at any time.

Good afternoon!

Even with a custom rate set against the client, that rate isn't being honored. QBO keeps trying to use the "Based on Location" option. If I create an invoice directly from QBO, the custom rate is honored. But never if I push an invoice from the PSA.

The issue seems to be that QBO forces the "Based on location" option despite the custom rate when third-party invoicing is used. Can we force QBO to reliably honor the custom rate with third-party invoicing?

Thanks!

Hey there, @redbigfoot.

I appreciate you coming back and letting us know how those steps went for you and your business. 

I can see how beneficial this could be for your business. However, there isn't a way to force QBO to reliably honor the custom rate. 

I suggest submitting feedback to our Product Developers so they can consider this as an option in the near future. 

Review our Updates site to keep up with what's new in the system. 

I hope this helps answer your question. Wishing you and your business continued success! 

I am having the same issue with QBO. I switched from QB desktop and now have to spend hours and hours trying to move the sales taxes onto their correct bracket. What a waste of time!!

For some reason QBO cant just take the sale taxes from our POS software and leave it alone, it moves into the incorrect bracket and causing us to report incorrect sales tax.

This Fu#$ing horrible. 

QB is basically telling you that you are screwed and that they do not care if your sales taxes are reported correctly or not. I do not understand why they even created sales tax classes when they just do what they want. 

The programmers need to fix this!!!!

QBO does NOT calculate sales tax correctly...even if the invoice is created in QBO (vs a 3rd party system) and the "Ship To' address is entered correctly.

This causes MAJOR issues for YOUR customers because QBO calculates and reports the sales tax incorrectly, thereby resulting in YOUR customers reporting and paying sales tax inaccurately...which could then lead to audits and penalties with the State taxing agencies.

This is definitely a huge problem for YOUR customers and therefore should be a huge problem for QBO as well.

This is ridiculous. The only way around the issue to open all invoices and change the tax rate manually. Just one more thing QuickBooks Online does that makes no sense. Many of us are only using QBO because we can connect 3rd party apps to it. Moving to QBO is one of the worst decisions we've ever made. 

Yep, had a support person on the phone tell me we are a small company and our complaint would get no traction.  We should all keep flooding their support and suggestions with this till they fix it. 

QBO has saved me time with payroll and created issues for me with Sales Tax.  I can't even say it is a wash because the Sales Tax thing is a bigger headache now.  Ugh.

I totally agree with you, this is a huge tax liability and I can see a class-action lawsuit against Intuit one day. Especially for anyone doing business in California, CDFTA does not care you will have thousands if not 100s of thousands of dollars in penalty access against you if you do not report the sales tax correctly. 

I keep checking to see if this "based on location function" can be shut off and I found this thread and had to ask ...@Candice C  Curious on this reply you gave?  It makes no sense...you do not grasp the user's complaint.  Submitting feedback is POINTLESS!! NO ONE AT QUICKBOOKS LISTENS TO THE USERS!!  Instead of fixing things the USERS want and NEED -you give us nonsense -that NO ONE CARES ABOUT!  Like the weird side bar menu changing or the invoices being "prettified" - no one cares! We do care that this tax function will not work as we need it to- or that we spend unnecessary time having to open up invoices and move the tax over to the function we need it to be.  Some companies - one I work with- uses the invoicing function within QB so it is easy to make sure the stupid tax button is where they want it at the point the invoice is created.  BUT other companies- like another I work with- actually use another program to invoice out of because QB is not capable of doing what the other software they use does- and then we merge it to copy into QB.  This merge is great except for the sales tax part- YES you guessed correctly if you think that the stupid QB tax setting WE CANNOT turn off messes it up- YES IT DOES!  It takes the tax setting already created on the invoice and decides to override it- because what ever is coded into this stupid inane tax setting tells my merged invoice that QB is right and the merged invoice (already sent to the client mind you) is wrong.  Which means I then have to open each invoice and wait for the system to open and scroll down and move the tax setting where it is supposed to be. (NOTE I am talking 20-50 invoices needing correction once the inane QB tax changing it)    Like @redbigfoot  stated- because while you can set up your tax settings how YOU NEED THEM AND WANT THEM this inane QB tax module overrides your data.   AS suggested by you- to make a complaint/submit feedback - I HAVE- NO ONE LISTENS!  The TAX FUNCTION is BROKEN!  

If other users, like me do not have their invoicing inside QB then they too may end up with batches of invoices to correct- which if one could do a batch setting then woohoo great- easy- but alas no- one has to do each invoice individually.  While on the subject of sales tax, and yes I HAVE ALSO SUBMITTED THIS for  YEARS now- QB doesn't even do the sales tax correctly for the State of WA- you neglect to solve for B&O but hey that's cool keep thinking the users are wrong and we need this tax setting set to on or else we can't function.  Like a service based business- in QB your tax system will tell a business- NO LIABILITY is due- because the system is not programmed correctly!  When in reality, a service based business in WA state has service tax to pay.  Oh and LOVED your comment-

"I can see how beneficial this could be for your business. However, there isn't a way to force QBO to reliably honor the custom rate. " 

Just great- tell @redbigfoot  you care and then basically, that what the user's want doesn't matter at all in the same sentence- in the south we call that "Bless your Heart"  not cool - instead - maybe YOU @Candice C  should submit to the product developers for all of us- hey you know a lot of users really want this functionality to work correctly can we get this fixed? Can we give them the ability to shut this function off? It seems most users hate it and it doesn't function for them.  - Just a thought. 

I wanted to bring to your attention an issue we are currently facing with the automatic sales tax migration from our BigCommerce web platform. The problem lies in the fact that the sales taxes are not correctly transferring to our new system.

Specifically, every sales receipt is defaulting to the "based on location" sales tax rate, which necessitates manual adjustments for each entry. This process is not only time-consuming but also prone to errors, as we need to ensure that the state's correct sales tax rate is reflected on each receipt.

Considering the efficiency and accuracy of our financial records, this situation needs urgent attention and resolution. If a solution cannot be found promptly, we may need to explore alternative accounting applications that can facilitate the proper migration of sales tax data.

Thank you for joining the thread, @sanman1. We appreciate your effort in sharing your concerns about the sales tax feature. Let me share additional information to help clear things out. 

The sales tax in QuickBooks Online (QBO) automatically calculates the total tax rate for each sale based on the following:

• Your customer's tax-exempt status
• Where you sell and where you ship
• What you sell

The "based on location" is your customer tax status because tax-exempt rules are not the same everywhere, QBO will sometimes need to calculate sales tax for tax-exempt customers. 

You may also refer to this article about how sales tax works in QBO: Learn how QuickBooks Online calculates sales tax.

Furthermore, QuickBooks Online (QBO) only depends on the data provided to them. If you integrate the BigCommerce platform into QBO, you might want to check the sales tax configuration from the BigCommerce. 

For more detailed information, you may check this article about the integration of BigCommerce: Integrate BigCommerce and QuickBooks Online using OneSaas.

In addition, I'll add this article when you want to memorize reports: Memorize reports in QuickBooks Online.

Feel free to reach us out again, if you have further concerns.

@Clark_B  DID YOU READ WHAT @sanman1  SAID!?!?!?!!? 

Let me increase the font so one can SEE WHAT THE ISSUE IS! Instead of "mansplaning" to @sanman1  how the inane tax system works.

WE ARE ALL HAVING THIS ISSUE!!! WE WANT TO TURN 

OFF BASED ON LOCATION!!!! IT OVER WRITES WHAT WE SET AS THE REAL TAX RATES FOR OUR BOOKS.  Let me reiterate

 @sanman1 's Awesome explanation of the error:

"I wanted to bring to your attention an issue we are currently facing with the automatic sales tax migration from our BigCommerce web platform. The problem lies in the fact that the sales taxes are not correctly transferring to our new system.

Specifically, every sales receipt is defaulting to the "based on location" sales tax rate, which necessitates manual adjustments for each entry. This process is not only time-consuming but also prone to errors, as we need to ensure that the state's correct sales tax rate is reflected on each receipt.

Considering the efficiency and accuracy of our financial records, this situation needs urgent attention and resolution. If a solution cannot be found promptly, we may need to explore alternative accounting applications that can facilitate the proper migration of sales tax data."

One hopes that you might grasp what we are trying to tell QUICKBOOKS- we KNOW HOW TO DO OUR TAXES- WE KNOW THE RATES WE NEED TO USE- GUESS WHAT- BASED ON LOCATION IS WRONG!!! IT DOES NOT FUNCTION CORRECTLY

PLEASE LISTEN AND REALIZE THE PROGRAM HAS A BUG AND YOU NEED TO FORWARD THIS TO THE TECHS FOR A FIX!

Hi,

I understand how it feels when QBO automatically changes the sales tax rate of the items based on location every time your transactions are imported from your third-party system. I can also imagine the inconvenience and the effort it takes to manually change the rates back to original. However, know that we are unable to turn off the "based on location" feature. Therefore, I'm inviting you to submit feedback on this matter. This way, our engineers can consider making changes in future updates.

Here's how:

1. Go to the Gear icon.
2. Select Feedback.
3. Enter your comments or product suggestions. 
4. Then select Next to submit feedback.

Please don't hesitate to reach out to me if you have other tax-related concerns in QuickBooks. Your feedback is valuable, and I appreciate your understanding as we work towards improving our platform.

Thank you for your response, though it appears that it did not address the core issue. We carefully reviewed all instructions and even watched relevant YouTube videos before we set up the sales tax rate. To put it plainly, we have a straightforward question: Is it possible to migrate a sales receipt from our website's platform into QuickBooks Online (QBO) while ensuring the accurate transfer of the sales tax rate and state authority information? If we are required to manually correct 30-50 receipts every day, it indicates a significant flaw in this process that needs immediate resolution.

Before you instruct us to check the sales tax configuration from the Big Commerce platform, we already did and it states "You have Automatic Taxes turned on in QuickBooks Online. There is no need to configure any tax mappings". 

We kindly request guidance on how to facilitate this uncomplicated transfer using the "Automatic Sales Tax" feature. Furthermore, there's another matter we overlooked in our previous message – the "This customer is not tax exempt" message that appears after migrating the receipt. As an ecommerce retailer catering to individual customers, we primarily deal with customers who are "out-of-state" and "tax-exempt," constituting around 90% of our sales. If there is a solution to address this issue, we would greatly appreciate your input. However, if not, it's evident that the sales tax system is flawed in several aspects and necessitates urgent rectification. Your prompt assistance in resolving these concerns would be highly valued. 

Everyone, I hope you're well.

I'm the original creator of this post. My specific issue is related to unusual taxing for specific SKUs that can vary by state, city, and country. Below is the process I used to fix this and there's also a solution for high-volume folks.

"Fix" in QBO for Limited SKUs that are often re-used

The reason why your tax is off is because the SKU isn't matching with the tax QBO expects. QBO needs to know the exact tax amount for each SKU it is sent. If you're sending unique SKUs to QBO, this likely isn't the solution for you. Also consider that the SKU number/name and not the description is what QBO uses here. So you can create a SKU like "ABC Services" that's encompassing of all your labor charges but put the specific services in the description. That will allow QBO to assign the right tax to ABC Services while still being useful for you and the client.

• Create a unique SKU for each item and each client. For example, if you have client "ABC" and you sell them widgets, make a SKU called "ABC Widget." If you have another company called XYZ they'd have "XYZ Widget."
• Make an invoice for each client with all the SKUs. Pro-tip, start small as a proof of concept in case this doesn't work the way you want.
• Make sure you know what your taxes should be for each SKU. In Colorado, the site is here. Each state has their own page for this.
• Push the invoice to QBO. Yep, the tax is wrong. Go to every single SKU in your Product List and set the correct tax category.
• Consider either deleting all your old SKUs or putting a name like "zLegacy" in front so they can be easily sorted to the bottom of your Products list.
• Delete the invoice from your invoicing system and QBO.
• I'd consider making a new invoice with each SKU to double check. Pro-tip, if you can show your tax per-SKU on your invoice that can help you figure out if a particular SKU is off.
• I recommend a triple-check. Each time you add a new SKU remember that it's a per client change and that you need to make adjustments each time in QBO.

High Volume Companies or Variable SKUs

There is software that can effectively invoice clients the correct amount and sort of factors in the tax. Avalara is one such company that integrates well with QBO and (hopefully) your invoicing system. Effectively, you get a SKU that's for the exact tax you need for each invoice. I demo'ed it and it's good if you're volume is high enough. The downside would be if you're using QBO to accurately pay taxes too. You'll need to pull that info from Avalara instead so make sure your accountant is looking in the right place for taxes. I don't recall but I believe you just switch all your clients to tax exempt in QBO to make this solution work.

Wrap-Up

Once I understood the process I could see why QBO is struggling with this. It feels like it should work better but, unfortunately, these are our options. I hope this helps someone!

The simple answer is "no". They have no way of turning it off. I had to create some Excel sheets that I will in the data to get the correct sales tax collected in each county/city. Add a lot of time in by day but it is as close as correct as I can get it. I have been emailing QB about it for a year now and no answers. 

This feature was also not on QB Desktop so that is what is most frustrating. 

I feel that there will be a big class action lawsuit one day once someone gets audited and fails because of this feature in QBO. 

Thank you for your prompt response. It is indeed surprising that Intuit did not conduct a more thorough evaluation before releasing this "upgrade." The so-called "automatic" sales tax feature falls short of our expectations, as we find ourselves manually adjusting every receipt to comply with the appropriate tax authority on a daily basis. It is evident that Intuit may not have adequately considered the needs of online goods sellers during the development of this sales tax upgrade.

Furthermore, it appears that they have made limited efforts to address and resolve these persistent issues. A few days ago, we engaged in a discussion with one of their agents to address the problems we have been encountering. Unfortunately, the agent seemed ill-informed and unable to offer any meaningful assistance. His response left much to be desired as he suggested, "Don't you have a bookkeeper who can make the necessary adjustments?"

We hope that Intuit will pay heed to the concerns of its customers who are facing significant challenges and take steps to rectify these issues. In the meantime, it appears we will need to hire a part-time bookkeeper to manually adjust all receipts to ensure compliance with the correct taxing authorities.

Thank you, Intuit, for the unexpected expenses and inconveniences caused by this situation.

I agree with all these posts and it is creating a huge amount of additional work to manually adjust the tax rate for each invoice that is pushed. We only starting having this problem last month.

It's almost like they don't care about providing a service that helps people but are more interested in just getting more clients and money and [removed] the people who have problems, we will just run another ad and get a different user to pay.

We have run into this same issue and they have given us the useless "just manually change it" like it's not that big of an issue. 

I don't have the capability to interact with specific software or platforms in real-time, so I can't directly assist you with turning off a "Based on location" sales tax feature. However, I can provide you with general guidance on where to find such settings. I know all of this because this happens with me sometimes.

1. Account Settings:

   • Log in to the platform or software where you are managing your sales tax.
   • Look for an "Account" or "Settings" section in the main menu.

2. Sales Tax Settings:

   • Within the account settings, find a section related to sales tax or taxation.
   • Look for options related to location-based sales tax.

3. Disable Location-Based Tax:

   • Once you are in the sales tax settings, check for an option to disable or turn off the "Based on location" feature.
   • This option might be labeled differently depending on the platform, so look for terms like "Location-Based Tax" or "Geographical Tax."

4. Save Changes:

   • After making changes, be sure to save the settings to apply the updates.

5. Contact Support:

   • If you can't find the option or are unsure, consider reaching out to the platform's customer support for assistance. They should be able to guide you through the process.

Have you changed over to the AST in QBO? If you have you will notice you cannot turn it off or change it.

For sales tax purposes, the state that has the right to tax the sale is the state where delivery occurs. The seller should collect the tax for the state where the property is delivered to the customer.

HOW DO WE DO THIS without having to change the tax manually for every invoice for customers with a different sales tax rate than our business address?