Skip to main content
N
nholzmann01
September 5, 2021
Solved

If I have a tax exempt customer (they resell my services) and I'm charging for a project, why is sales tax charged on the invoice?

  • September 5, 2021
  • 3 replies
  • 0 views

I have a customer who resells my services. All taxable services are tax exempt for this customer. The customer is correctly marked as tax exempt. When I create an invoice for the customer, no tax is charged. BUT... if I create a project and then assign the same product/service (that's tax-free to the customer) to the customer's project, then QBO wants to charge sales tax for the product/service. HELP! Thanks in advance.

Best answer by Kristine Mae

Good observation, Nholzmann01. Let me share how it works in QuickBooks Online.

 

When you create customers, you have the option to exempt them from sales tax. It's different from the project, though. It may be under the tax-exempt customer. However, you're unable to edit and exempt the project itself. That's why the sales tax is still calculated.

 

You'll have to uncheck the TAX column manually as a workaround. This way, sales tax will not calculate. 

 

I'll include this article to help you learn more about sales tax in QuickBooks Online: Use automated sales tax on an invoice or sales receipt.

 

If you have additional questions, don't hesitate to get back to this thread. We'll reply as soon as we can. Keep safe!

3 replies

Kristine Mae
Kristine MaeAnswer
September 5, 2021

Good observation, Nholzmann01. Let me share how it works in QuickBooks Online.

 

When you create customers, you have the option to exempt them from sales tax. It's different from the project, though. It may be under the tax-exempt customer. However, you're unable to edit and exempt the project itself. That's why the sales tax is still calculated.

 

You'll have to uncheck the TAX column manually as a workaround. This way, sales tax will not calculate. 

 

I'll include this article to help you learn more about sales tax in QuickBooks Online: Use automated sales tax on an invoice or sales receipt.

 

If you have additional questions, don't hesitate to get back to this thread. We'll reply as soon as we can. Keep safe!

N
nholzmann01Author
September 6, 2021

Kristine,

Thanks for your feedback and insight. I'll use the work-around for now. I'd also recommend adding this as a feature request/backlog item. If a project is assigned to a tax-exempt customer, then the project (in my opinion) should inherit the tax status of the customer (ie: exempt) even if the products/services are taxable.

 

I can't think of a situation where this would not be the desired result. :)

    A
    AileneA
    September 6, 2021

    I appreciate your input from every angle, nholzmann01. 

     

    I understand how the workflow you're looking for is beneficial to your business. To ensure your voice is heard, I can pass along another feature request on my end. 

     

    The more request this gets, the more likely it'll be part of future enhancements. We always value customers who are keen to give us their feedback. I’ll be sure to follow-up on this matter with our managerial team. This way, they could come up with the appropriate course of action to improve QuickBooks as soon as possible.

     

    For the time being, you can visit our blog and sign up to our Newsletter. This way, you’ll receive email updates about new changes in the product. Our developers get inspiration from customers, so your voice makes a huge impact. 

     

    Please know that our doors are open for any additional concerns about QuickBooks. Just leave us a message below, and I'll ensure to take care of them. Keep safe.

    C
    Carol Flores
    September 17, 2021

    Good morning,

     

    I am also running into this issue with Projects. My client uses projects for roughly 25% of our projects are exempt. We are unable to fully utilize an app (AvaTax) that we have to calculate tax because the exemption information  does not flow through to projects. Using the Tax box checkbox does not work because we control item taxability through our APP. Is there any date surrounding adding this functionality?

    Candice C
    Candice C
    September 17, 2021

    Good afternoon, @Carol Flores. 

     

    Thanks for chiming in on this thread. Allow me to give you some information on this subject. 

     

    I'll pass along your feedback regarding the Projects feature (to have the customer's tax exempt status carry over to the transactions in their project). You can check out our Blog site to keep up with what's new in the product. 

     

    I do suggest reaching out to AvaTax's support team so they can look into ways to get the tax exempt status to sync with QBO. Below is a screenshot of how you can get it in touch with them: 

     

     

    Please feel free to post a comment if you have any other questions. Take care! 

    T
    Todd B1
    November 7, 2023

    We have run into this issue also. Not sure why QuickBooks on line has to so difficult to manage.  What we are running into is apparently QuickBooks is looking at the ship to box instead of the Customer info. So even though the customer is in the system as tax exempt it still keeps wanting to charge tax. This happens almost every time we type in a customer.  It is very annoying and hopefully will be fixed soon. The old desktop version was much easier and user friendly for sure. 

    Terms & ConditionsAccessibility statement