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Old-Coot
May 19, 2025
Question

Sales tax allowance / adjustment

  • May 19, 2025
  • 1 reply
  • 0 views

Our state allows a minor reduction in sales tax due if the return is on time:  we still determine the amount for state sales tax, municipal tax, tourism tax and gross receipts tax ... and we have individual sales tax codes for each of those ... so the accumulation of those is the tax due. Then if the return is filed on time, an allowance is determined from a percentage against the total due. I would like to book this against an "other income" adjustment account, in the same way we would post a penalty to an "other expense" adjustment account if filed late.

 

The problem is how do I post the reduction?  The system won't let me post the minor amount to the other income adjustment account because it says it can't write a negative check!  The check is not negative!! Example:  The total accumulated tax is $211, and the allowance I want to deduct is $3. The total should be $208, which is not a negative number.  ????  What do I do?

    1 reply

    J
    JanbonN
    May 19, 2025

    To correctly post a sales tax adjustment, you should use the Sales Tax Adjustment feature in QuickBooks and pair it with either a sales receipt or a credit memo to ensure the adjustment is accurately reflected in your reports, Old-Coot.

     

    Here's how to adjust the sales tax due:

     

    1. Go to the Vendors menu, select Sales Tax, and then choose Adjust Sales Tax Due.
    2. In the Sales Tax Adjustment window, enter the Adjustment Date, Sales Tax Vendor, Adjustment Account (income account), and other relevant information.
    3. In the ADJUSTMENT section, tick the Reduce Sales Tax By radio button and enter the Amount in the field.
    4. You can utilize the Memo field to enter more details.
    5. Once done, click OK.

     

    Please refer to this article for the next steps to follow about creating a Credit memo and more guidance on the procedure: Process sales tax adjustment.

     

    Once the adjustment is complete, you can proceed to record the sales tax payment in QuickBooks to ensure your financial records remain precise and up-to-date.

     

    If you have further inquiries or need additional assistance with managing your sales tax in QuickBooks, feel free to return to this thread. We're here to provide support and help you navigate these tasks.

    O
    Old-CootAuthor
    May 20, 2025

    I reviewed the link to "Process Sales Tax Adjustment", and have a few comments. The process outlined seems a tad too complex than it need be, and I'm not sure I understand all the GL impact of the dual steps described. If someone can clarify if I've misunderstood or am just too dense, please do so.

     

    I admit that I do not know how every state operates with allowances granted or penalties applied, but in those that I am familiar with, the allowances for timely filing are not specific to any individual tax item (state, municipal, tourism, or gross receipts) but merely a reduction in the total tax due for the period covered. So the QB method of doing an adjustment back to a specific tax item ... or worse yet, allocating the allowance among all the tax items involved ... would be unnecessary if there had been two additional tax items created: one for allowances posting to an "other income" account, and one for a penalty posting to an "other expense" account. Then when a Sales Tax Adjustment was created, these two were what was offered in the adjustment screen. When payment actually made, it would include the individual sales tax items as generated by the period sales activity plus the additional two adjustment items that would serve to increase or decrease the actual payment made. Making users go through the additional Sales Receipt and/or Credit Memo process, which takes precious time and makes things more complex than needed.

     

    Am I crazy / misguided, or is the QB Design Team? If what I'm saying makes sense, I'll submit this to the Feedback (yes, I know how to do that) even though I'm relatively sure that nothing will happen from that until the next milenia.

      K
      KimberlyS
      May 20, 2025

      We appreciate your time and effort in providing details regarding your concern, Old-Coot. We aim to ensure you can maximize your experience when handling tax liabilities.

       

      We value your observations and suggestions about the sales tax adjustments process and its impact on the general ledger (GL) in QuickBooks Desktop. Therefore, I recommend sending feedback directly to our product development team. They will review your input and may incorporate it into future updates.

       

      Here's how:

       

      1. Head to the Help menu at the top.
      2. Choose Send Feedback Online, then Product Suggestion.
      3. Enter your product improvement ideas once a pop-up window appears.
      4. Select Send Feedback.

       

       

      For more information, refer to this article: Give feedback on QuickBooks products and services.

       

      Additionally, make sure to reconcile your accounts regularly. This helps keep a balanced record for accurate financial reporting, providing a clear snapshot of your business's standing.

       

      We encourage you to continue posting in the Community forum using the Reply button below whenever you have questions or need clarification on the method of adjusting sales tax in QuickBooks Desktop. We're always around to help!

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