During the process of filling tax returns or doing other tax-related tasks on QuickBooks Desktop, users may run into common Sales Tax Issues. This piece of writing shall be explaining different Sales Tax Issues in QuickBooks and measures to fix them. So, keep reading.

Common Sales Tax Issues and Solutions in QuickBooks Desktop

Error 1: Invoice prints T although the sales tax feature is turned off

Cause: Issues within the invoice template

Solution 1: Creation of a new template

  • To start, go to the Lists menu and pick Templates.
  • Click New in the Templates box.

  • After that, choose the type of template.
  • Hit on Ok.
  • Name the template, and then save the modifications.

Solution 2: Creation of a Duplicate Template

  • Click on Lists.
  • Choose Templates option.
  • Under Templates, pick the invoice template to show.
  • Now, go to the Templates menu and click on Duplicate.

  • In the box labeled “Select Template Type,” choose the “Invoice.”
  • After that, click “Ok.”

Solution 3: Opting for the Default option

  • Choose the “Lists” option.
  • Then, go to Templates.

  • In the Templates pane, double-click the Invoice template.
  • Go to basic customization.
  • Click on “Additional Customization.”
  • Choose the “Default” option and click on “OK.”

Issue 2: Setting the Sales Tax Payable improperly in Write Checks

Solution: Review the Client Data

  • First, the user create a Company File copy.
  • Then, check the Bank Register to see how the payments were made.
  • Here, find any sales tax payments that were entered erroneously.
  • In the Vendors menu, choose the Sales Tax
  • Click on the “Pay Sales Tax” option.
  • If you have more than one account, use the Pay from Account option to choose the one to use.
  • The checking account should have enough money in it to pay for the sales tax. If the user doesn’t have enough money, they should choose an alternative account.
  • After that, put the date of the sales tax payment in the Check Date field.
  • Change the date under “Show sales tax due through” to the end of the payment period.
  • The user should input the check number from the first payment into the Starting Check Number field.
  • Then, in the column labeled “Pay,” check the boxes next to the items to pay for.
  • Now, choose the amount in the “Amount Paid” column and change it for any of the items needed.
  • The total should be the same as what was paid at the beginning. Once that’s been checked, click on Ok.
  • Delete the initial payment transactions from QuickBooks.
  • After that, Choose Chart of Accounts from the Lists tab.
  • Type in the payment and double-click the bank account you’ve already saved.
  • To change, scroll to the date you paid sales tax.
  • Keep in mind that the entries should be near to each other because the dates on the original payment and the payment that was re-entered are the same.
  • The payment will be put in again as a type called TAXPMT. Check the TAXPMT entry and then pick Record if the first payment has already been received and cleared by the bank.
  • Make careful to modify the check numbers in the register to match the real check numbers if you pay sales tax to more than one tax agency and the checks weren’t issued in sequence to begin with. To do this, click on the Number section, input the right check number, and then click on Record.
  • Select the first sales tax payment (CHK/CHK type), then go to the Edit menu and click “Delete Check.”
  • Double-check whether the error got fixed.
  • Run a report on your sales tax liability for the most recent date and compare the findings to the amount left in the sales tax due account.
  • Run the Vendor Balance Detail report to see how much each tax agency owes to each vendor.
  • Run the Transaction List by Vendor report to see whether there are any payments that have already been made.

Issue 3: The user must specify vendor name for his/her sales tax account

Fix: Type in a vendor name in the Customer: Job section when creating the journal entry.

Error 4: Negative sales tax payable on the cash basis Balance Sheet report

Cause: If the user pays sales tax at the end of the month, he or she should be able to do so either when the invoice is made (on an accrual basis) or when the tax is paid. (Cash basis). If the payment is made on the accrual basis but the report is performed on the cash basis, the Sales Tax Payable account shall have a negative value.

How to set the Sales tax basis in QuickBooks:

  • Log in to the Company File as an admin.
  • Hit on the File tab.
  • Change the mode to “Single-user Mode.”

  • Now, click on Edit and opt for Preferences.
  • In the Preferences window, click on Sales Tax.
  • Opt for “Company Preferences.”

  • In the “When do you have to pay sales tax?” option, choose the appropriate option.
  • When that’s done, click on OK.

Error 5: Inactive Sales Tax Items also impact the Sales Tax Group

Fix: When a Sales Tax Item is set to Inactive, the allocated Sales Tax Group does not have the item deleted. To effectively apply the active sales tax items, the inactive sales tax items must be cleared from the Sales Tax Group. The steps for the same are given as under:

  • Click on Lists.
  • Here, click on the “Item List” button.
  • Now, double-click the Sales Tax Group.

  • Select the sales tax item and then press the Ctrl and Delete keys simultaneously.
  • Finally, click “Ok.”

Issue 6: Error when users try to create a Credit Memo

Cause: The sales tax item on the invoice is included even if the sales tax setting in the company file is disabled.

Fix: Enable Sales Tax on in the company file

  • Click on the Edit tab.
  • Opt for Preferences.
  • Click on Sales Tax, then click on Company Preferences.

  • Hit on Yes when the prompt showed up stating “Do you charge sales tax?”

Winding Up!

Through this blog, we visited the various sales tax issues in QuickBooks Desktop and the various fixes for these issues. If you have any doubts or opinions to share, or need our QuickBooks errors support experts to guide you through, call us at 1-800-761-1787.