View Full Version : Credit Memo For Sales Tax

03-30-2004, 02:44 PM

I am having a problem with the correct way to handle the crediting of sales tax. Every so often I find that one of our customers is exempt from sales tax. I am not informed of this until after an invoice is created and they remit their check, less the sales tax.

I simply adjust the invoice if I am still in the same accounting period when the invoice was created. However, for prior periods I have been going into A/R Credit Memo's and creating a credit which would result in the sales tax amount being the total credit amount. This produces the correct outcome, but it's truly not accurate as only a portion of the sales tax is credited and the rest goes against sales.

I have tried to simply just enter in the credit amount in the sales tax field, but P/T will not allow a credit memo with only sales tax being credited and applied against an invoice.

Can anyone please advise as to how you handle similiar situations?

Thanks for your help!

04-06-2004, 03:13 PM
For purpose of keeping the taxable/exempt sales report correct, I would recommend actually doing a return on the item and leave tax type as taxable for that line, and on the next do the sale again but select an exempt tax type for it.

04-07-2004, 03:12 PM
If I understand you correctly; I should return all items on the invoice and create a new invoice after I change the customer from taxable to tax-exempt?

04-08-2004, 08:36 AM
Yes but you can do it on the same invoice or two seperate ones. Each line has a column to determine whether it is taxable or not.

04-22-2004, 12:20 PM
Go into credit memos. Don't type in a line item. At the bottom, type in the amount of the sales tax credit into the sales tax line. That's how I do mine and it's very simple.

04-22-2004, 01:48 PM
Thanks Kimber0405...

That's simple and I just never tried it since the invoice form doesn't allow you to do it.


04-26-2004, 02:38 PM
I just had the opportunity to try your method and it worked great. I had thought that I tried doing that, but I must have been trying to apply it against an invoice. The trick is to not apply it against the invoice, then when the customer pays the invoice you apply the money to both the original invoice and the credit memo which results in the net amount being the sale less the sales tax. Thanks again.