Refund Sales Tax

Thank you for reaching out to the Community, @toni1.

Let me help you refund sales tax to your customer and provide information on how to adjust sales tax in QuickBooks Desktop (QBDT).

If you have charged sales tax for your tax-exempt customer, you can process a refund for them using one of the options outlined below. Contact your accounting professional to know which option works best for your business.

Option 1: Credit sales tax charged to a sales tax-exempt customer.

1. Create a credit memo.
2. From the Customers menu, click Create Credit Memos/Refunds.
3. Enter the required information. Note that the credit memo must match the original invoice items and quantity (including the sales tax amount).
4. Enter the current date.
5. Select Save & Close.

After that, create a new invoice.

1. From the Customers menu, click Create Invoices.
2. Enter the required information. The new invoice should match the original invoice for the same items but mark them Non-Taxable using today's date.
3. Then, select the Receive Payments window and apply the existing credit to the invoice.

This will leave a credit balance for only the amount of the sale tax that can be applied to a future invoice or refunded via check.

Additionally, the Sales Tax Liability Report will show taxable sales reduced by the amount of the credit memo and the non-taxable sales increased by the amount of the corrected invoice.

For more detailed information and to check for Options 2 and 3 in refunding sales tax for your tax-exempt customer, refer to this article: Refund sales tax collected from the tax-exempt customer.

In regards to how to adjust your sales tax, When you make sales tax adjustments, you move money into or out of your Sales Tax Liability account. You adjust your sales tax liability for reasons like:

• A credit for previous overpayment or early payment discount given by your sales tax agency.
• A fine charged to you by your tax agency for late or non-payment in the previous tax year.
• Corrections to sales in a previous period.
• Rounding differences between QuickBooks and your sales tax forms.
• Sales tax holiday declared by your agency.

For more detailed information and how to adjust your sales tax, refer to this article: Process sales tax adjustment.

I'll also add these articles to help you how to exempt your company from sales tax and track sales tax on purchases from vendors.

• Track sales tax on purchases from vendors.
• Request sales tax exemption and refund.

Please don't hesitate to leave a comment below If you have any other concerns about Sales Tax. I'll be here to assist you.