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lee68
March 18, 2021
Question

When QB applies an automatic late fee on an invoice it add sales tax to everything including a tax exempt customer and/or items. Is anyone else having this issue?

  • March 18, 2021
  • 3 replies
  • 0 views
A late fee should not be taxed anyway so I am not sure why this is happening at all.

    3 replies

    katherinejoyceO
    katherinejoyceO
    March 18, 2021

    Welcome to the Community, @lee68. As an insight, QuickBooks Online (QBO) calculates automatic late fees based on the balance due, sales tax, shipping, and discounts. 

     

    This could be the reason QBO charges tax after setting up this item as non-taxable.  

     

    I've got you the steps to stop the system from calculating sales tax when the late fees are added to an invoice. I'd suggest you check first with your state tax authority as to which goods and services are subject to a sales tax to ensure we're compliant with their rules and regulations.

     

    Once verified, uncheck the Tax box on each invoice so the system won't charge a sales tax to your customer. 

     

    Additionally, you can remove a late fee from an invoice. To do this, select the Trash bin icon located on the line of the Product/Service item. 

     

    For future reference, you can run the Sales Tax Liability report to get a detailed look at the taxes you owe and why you owe them. 

     

    I'm always around here to help you more should you have additional concerns about sales taxes. Take care!

    H
    Having Fun With
    June 27, 2024

    The late fee populates automatically on every invoice once it goes beyond the due date, but when it populates, it shows the line item taxable.  I had unchecked the product or service non-taxable from the very root, but it continues showing taxable.  Is there a way make sure that when it populates, it does not have the taxable check mark on it?

    A
    Anonymous
    June 27, 2024

    Hello there.

     

    This is not the impression I want you to have about the automated tax feature in QuickBooks Online (QBO). Let me share updates about removing the taxable checkmarks from your invoices.

     

    I noticed that you tried to turn off the option, but since you couldn't, I recommend ensuring that your products and services are marked as non-taxable. To do this, review each item and classify it as non-taxable if you're not collecting sales tax from customers.

     

    We recognize that each company has unique needs, and I can see how the feature you're looking for would benefit and empower your business. With this, I highly recommend providing direct feedback to our product engineers as we value your input, which contributes to shaping future updates:

     

    1. Click on the Gear Icon.
    2. Under Profile, select Feedback.
    3. Enter your suggestions.
    4. Then hit Submit.

     

    Once done, you can monitor and check the status of your request by checking our Customer Feedback.

     

    Additionally, if you want to keep track of and view the snapshots of your taxes in QBO, you can pull up some reports and customize them with the information you need. See this article for guidance: Run reports in QuickBooks Online.

     

    Feel free to leave a comment if you have additional questions about sales taxes or any QuickBooks concerns. I'm always ready to help you here.

    L
    lee68Author
    March 22, 2021

    Thank you for such a quick response. Is the proper step to uncheck taxable status on each line item on every invoice? That seems like a redundant step. The item is taxable but it is at the customer level where the tax exemption comes in. Once an automatic late fee is assessed it changes the tax exempt status to all taxable. This causes an issue when automatic reminders are sent via QB.

      Candice C
      Candice C
      March 22, 2021

      Good evening, @lee68. 

       

      Thanks for reaching back out to the Community. I appreciate you coming back and asking for clarification on this subject. 

       

      Yes, you're on the right track. The proper instructions are to uncheck every item as need be on the invoice. Exactly like my colleague stated. You can also check out these guides below for further insight into some additional steps that may help:

       

       

      If you're still unsure of what to do, feel free to ask. Should you need further assistance, just let me know. I want to make sure that you're able to get back on track with your business. Wishing you continued success!

      V
      Vp2001
      April 25, 2023

      Want to know what’s even crazier than QBO computing sales tax to non-taxable items like late fees???? For them to not tax products that are set up to be taxed…. Via delayed charges linked to recurring invoices. What it does is add the said products to the recurring invoice, act as if it will be taxed (showing you the little green check mark next to it as taxable). Not computing or adding in the tax, showing no amount in the taxable line, and then automatically sends them to the client without charging them tax…. But guess who still has to pay the uncollected sales tax on the delayed charges? The company. These things are bass akwards. 

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