We have a few invoices that customers were supposed to be tax exempt, and they were charged tax on invoices. The customer paid the invoice leaving the tax unpaid. Is there anything that can be done to get rid of the tax, so it isn't showing on invoices as unpaid?
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Hey Anna - happy to assist.
Yes, you can credit these out (correctly!) - please see below.
Open the invoice → 3 dots (upper-right) → “Add Credit Memo”
Fill in the details as follows: (See attached screenshot for a visual)
Division - your choice
Sale Amount - $0.00 (this is important)
Credit Date - your choice (if these are old invoices, you’ll only be able to select the earliest date in an open month)
Taxable Amount - Enter the amount that makes the “Tax Amount” equal to the sales tax that you want to credit (in screenshot, you can see the highlighted “Sales Tax” box on the invoice in the background to the right)
Click “Apply”
The Credit Memo screen will open - you will see that the credit amount is equal to the “Tax Amount” box from the previous entry - Click “Save” to apply the credit memo to the invoice
Note for the “backend” of the downstream effects of this process:
This method will reduce both “Taxable Dollars” (equal to the “taxable amount” entered in the above process) AND “Tax Amount” (equal to the amount of the credit memo created in the above process) on the Tax Entity Report in the month the credit memo is dated.
If you use the Tax Entity Report for monthly sales tax reporting and remit based on invoiced revenue, you already remitted the (now-credited) tax dollars to the state - this process reduces your current month’s sales tax remittance equally to offset the tax dollars erroneously paid in the month the credited invoice(s) were dated
I hope this helps - let me know if you need further clarification!
