FAQ #: 138
I need to give a customer credit for sales tax already paid. This credit is not for a current invoice, but for sales tax previously paid. How do I enter a credit for sales tax only?

A credit for sales tax only can be entered directly on a customer's account through Cash Posting. This will keep you from having to worry about sales and or gross margin being updated.

1. In Cash Posting, select the Reversing Entries mode.

2. Enter the customer's account number. You may get a message that the customer has no items to reverse, click OK if so.

3. Enter a check # if desired. Check #'s can be alphanumeric, so you can enter something like "Sales Tax Credit".

4. DO NOT enter an amount in the Check Amount field. Instead, click on Credit Type and select an adjustment type that contains the word "TAX" or "Tax". Write-off types can be set up through the Application Interface program and you must have a write-off type that specifies it is a tax write-off for this procedure to correctly update your Tax Jurisdiction Report.

5. Enter the amount of the credit to be given in the Credit Amount field.

6. Adjust the G/L Account # if it is incorrect or needs to be changed.

7. A window will be presented showing the customer's current Tax Jurisdiction # and the Sales $. If the customer is currently in a different jurisdiction, or currently set to non-taxable, you may need to either adjust the jurisdiction that should be affected, and/or enter the Sales $ amount. (This is not the credit amount, but the amount of sales $ the tax amount would have been calculated from).

8. Click on Unapplied. You will get a warning that you should not use Unapplied when adjusting sales tax. Click Yes to proceed anyway. You will get a second warning indicating that you should not void this Unapplied entry, click Yes to proceed.

9. Select the "Leave as Unapplied" option and then either enter a reference number, or use the Assign # button to have a reference automatically assigned for you. Click OK.

This procedure will leave the Credit Amount as a credit memo on the customer's account. It will also use the Sales $ amount (from the tax pop-up window) to subtract from your taxable sales and add to your non-taxable sales on the Tax Jurisdiction Report. The journals will also update the G/L appropriately when run.