Sales Tax Credit to Customer

Question

I have a customer that we billed sales tax to the labor portion of their job. They are now sending me a tax exempt certificate for that. My question is how do I credit the sales tax off of the invoice? 
 I tried entering a credit memo to the customers invoice putting in the amount of the sales tax and then distributed it to sales tax. I then saw a positive number to taxable and negative number to non taxable in the sales tax reporting. This should then show up as a credit on my sales tax report; correct? I haven't posted it yet, as I wanted to make sure this is the correct way to go about it. 
 
 Help is very appreciated. 
 
 Thank you!

DeeDee Heyne · Accepted Answer

Additionally if the sales tax has already been remitted to the state, etc as is often the case- I suggest returning the Invoice with todays date and then redoing the invoice correctly with todays date. This makes sure that the credit for the sales tax is included in the current month and you don&rsquo;t mess up the sales from prior periods for audit purposes.

Coleen Graber · Answer

jkrueger, If sales tax was not posted correctly on the invoice, I would void the invoice and repost it correctly. Voiding the invoice reverses the sales tax automatically. If you are unable to void the invoice, then you can post a credit memo to the invoice and then manually verify the Tax Reporting amounts. First, print the AR, Reports, Sales Tax Report for the date range of the invoice you are selecting to adjust to identify the taxable, non-taxable and sales tax charged. Use this report to make sure the tax reporting is reversed correctly. When doing a Credit Memo to the sales tax, you will want to review the &lsquo;Tax Reporting&rsquo; to verify how you want the taxable and non-taxable to be adjusted. In reviewing the Tax Reporting, since a credit memo reduces an invoice balance, a positive number on this screen will be subtracted and a negative number will be added to the 'Taxable' and 'Non-taxable' fields. Here are some Knowledge Base articles regarding sales tax for you to review. (Articles can also be accessed by going to sagekb.com) : 
 How to correct the sales tax on an open invoice (97709) https://support.na.sage.com/selfservice/viewdocument.do?externalID=97709 
 How to adjust sales tax on credit or debit memos (18242) https://support.na.sage.com/selfservice/viewdocument.do?externalID=18242 
 How to interpret A/R credit or debit memo sales tax reporting distribution (18239) https://support.na.sage.com/selfservice/viewdocument.do?externalID=18239 
 Sincerely, Coleen

Coleen Graber · Answer

The system will allow you to do a Credit memo to a paid invoice. When you post the invoice it will prompt "OPEN CREDIT OR CASH REFUND?" At this point you can select Open credits. Then the Open credit it available for you to apply to a future invoice. (I believe the only limitation in our system would be if it is an older invoice and has been closed for more that 3 months. Otherwise, you should be fine). To show in your current Sales Tax Report, same as above, you would want to use the current month date to see the credit in your current month sales tax report. The only other option is to do the credit memo and select Open Credit (instead of the invoice #). And proceed with your processing your credit from there. 
 Sincerely, 
 Coleen

Sage BusinessWorks

Sales Tax Credit to Customer

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