Does Quickbooks use the state in the Territory window of Customer invoice to determine Sales Tax addition? If so, why are deactivated states still adding tax?

Good day! I'd like to jump in and help with your question about sales tax agencies, Catherine.

QuickBooks Online will take into account all relevant tax agencies including state, county, and district jurisdictions when calculating sales taxes.

Please note that if a tax agency is marked as inactive, the system will automatically default to the shipping address for tax calculation purposes. This is a safeguard measure to prevent transactions from inadvertently omitting any applicable sales taxes.

If a customer has relocated to any new state, you can update their profile address. By doing so, you ensure that the correct tax rates are applied based on the customer's current location, preventing any potential discrepancies in sales tax calculations.

Here's what you need to do:

1. Open the customer's profile and click Edit.
2. Scroll down to the Address section and update the address.
3. Click Save.

Once the address has been updated, you can delete and recreate the invoice to assign the right tax agency to it. Here's an article as a guide: Void Or Delete Transactions In QuickBooks Online.

Additionally, here are some articles that provide further guidance and information on collecting sales tax in QBO: 

• Edit Sales Tax Rate In QuickBooks Online
• Manage Sales Tax Payments In QuickBooks Online

Feel free to reach out to the Community if you need further assistance when creating sales transactions and doing business in QBO as a whole, Catherine. The Community is always here to help you again.