Crediting Sales Tax
If you have taxed a non-taxable customer on an invoice, you can reverse the sales tax from the invoice without voiding the entire invoice. Before you reverse the tax you must first use your taxing rules to determine if the customer has sufficiently proven tax exempt status.
Once you have decided to reverse the tax on a customer invoice, you can either reverse the tax prior to the customer sending payment or during the payment application process. If you decide to reverse the tax prior to receiving payment, you are required to create a zero-dollar cash payment that reverses the sales tax. See the Crediting Sales Tax Prior to Payment section of this topic for instructions. You can also reverse the sales tax when you receive payment from the customer for the invoice amount minus the invoiced tax. For example, if you had an invoice with a total of $107, the breakdown would be a $100 sub-total and a $7 tax. The customer would remit a payment of $100, and you could reverse the tax during the payment receipt of $100.
You can also use the reverse tax functionality when using the Advanced Add option while receiving a payment. You use the Advanced Add functionality to add invoices to a payment window that were not originally invoiced to the customer from whom you are receiving payment. See the Crediting Sales Tax Using Advanced Add section of this topic for instructions.
When crediting sales tax, e-automate posts the tax credit into the period associated with the date on the payment window, if it is open. If the invoice was generated in a prior period and you are crediting the tax in the current open period, the tax credit is properly posted to the current open period and is reflected on your sales tax report in the current period. This functionality protects you in the event you have already paid your sales tax for the prior period but you post a sales tax credit in the current open period.
Note: The following scenario assumes you are closing your accounting periods and not changing the dates in the payment window.
Crediting Sales Tax Prior to PaymentCrediting Sales Tax Prior to Payment
On the Accounting menu, select Accounts Receivable > Record Customer Payments to open the Record Customer Payment window.
Complete the following fields as appropriate:
Customer: Customer who made the payment. The phone number will automatically populate.
Description: Optional description of the payment.
Number: Automatically assigned customer payment number. You may change it.
Date: Date on which the sales tax credit is being created.
Method: When crediting sales tax prior to payment, you should select Cash.
Amount: Enter zero in this field.
In the Invoice field, use the lookup to select the invoice on which you want to reverse sales tax.
Leave the Amount field as set by e-automate. Should be the current balance on the invoice.
Click [QuickAdd] to add the invoice to the Record Customer Payment window.
Select the invoice from the list and click [Edit] to open the Edit Customer Payment Invoice window.
Complete the following fields as appropriate:
In the Apply to credit memo/invoice field, verify you have the correct invoice.
In the Amount to apply field, enter zero.
In the Terms discount amount field, leave at zero.
Check the Reverse sales tax checkbox.
Note: In the Summary box, e-automate displays the Tax Adjustment line for the tax credit being created.
Leave the remaining account and department fields as currently set.
Click [OK] to close the Edit Customer Payment Invoice window.
On the Invoices tab, verify the Balance column reflects the pre-tax sub-total and the Tax Adjustment column displays the tax adjustment for the invoice.
Click [OK] to record the zero-dollar payment and the tax adjustment.
Note: Once you have posted, e-automate displays the balance due on the invoice to be the invoice pre-tax subtotal.
Crediting Sales Tax During PaymentCrediting Sales Tax During Payment
On the Accounting menu, select Accounts Receivable > Record Customer Payments to open the Record Customer Payment window.
Complete the following fields as appropriate:
Customer: Customer who made the payment. The phone number will automatically populate.
Description: Optional description of the payment.
Number: Automatically assigned customer payment number. You may change it.
Date: Date on which the payment (less tax) is received.
Method: Select the appropriate method and complete the method fields applicable to your selected method.
Amount: Enter the payment amount, typically the tax-less subtotal.
In the Invoice field, use the lookup to select the invoice on which you want to record payment and reverse sales tax.
Leave the Amount field as set by e-automate. Should be the current balance on the invoice.
Click [QuickAdd] to add the invoice to the Record Customer Payment window.
Select the invoice from the list and click [Edit] to open the Edit Accounts Receivable Receipt Detail window.
Complete the following fields as appropriate:
In the Apply to credit memo/invoice field, verify you have the correct invoice.
In the Amount to apply field, leave as populated by e-automate. This is typically the invoice balance due.
In the Terms discount amount field, leave at zero.
Check the Reverse sales tax checkbox.
Note: In the Summary box, e-automate displays the Tax Adjustment line for the tax credit being created and modifies the Amount to apply field to be the tax-less subtotal.
Leave the remaining account and department fields as currently set.
Click [OK] to close the Edit Accounts Receivable Receipt Detail window.
On the Invoices tab, verify the Balance column reflects a zero balance due and the Tax Adjustment column displays the tax adjustment for the invoice.
Click [OK] to record the payment and the tax adjustment.
Crediting Sales Tax Using Advanced AddCrediting Sales Tax Using Advanced Add
The following steps are provided with the assumption that you have received a tax-less payment for invoices and you are processing the payment.
On the Accounting menu, select Accounts Receivable > Record Customer Payments to open the Record Customer Payment window.
Complete the following fields as appropriate:
Customer: Customer who made the payment. The phone number will automatically populate.
Description: Optional description of the payment.
Number: Automatically assigned customer payment number. You may change it.
Date: Date on which the payment (less tax) is received.
Method: Select the appropriate method and complete the method fields applicable to your selected method.
Amount: Enter the payment amount, typically the tax-less subtotal.
Click [Advanced Add] to open the Add Customer Payments Invoices window.
Select the appropriate radio button to display the invoice for which you are receiving payment, either Show only invoices billed to customer and related customers or Show all invoices.
Complete the following:
Locate the invoice in the list for which you want to reverse sales tax.
Select the checkbox next to the invoice.
Right-click on the invoice and select Reverse Sales Tax.
Note: E-automate identifies the tax adjustment in the Tax Adj. column. You may need to scroll to the right to view the column.
Repeat step 5 until you have reversed sales tax on all appropriate invoices.
Click [OK] to add the invoices to the payment window.
Click [OK] to record the payment and the tax adjustment(s).
Crediting Sales Tax After Subtotal is PaidCrediting Sales Tax After Subtotal is Paid
On the Accounting menu, select Accounts Receivable > Record Customer Payments to open the Record Customer Payment window.
Complete the following fields as appropriate:
Customer: Customer has a tax balance remaining on an invoice. The phone number will automatically populate.
Description: Optional description of the payment.
Number: Automatically assigned customer payment number. You may change it.
Date: Date on which the tax credit is being recorded.
Method: Select cash. This is a zero dollar cash payment.
Amount: Enter zero for the payment amount.
In the Invoice field, use the lookup to select the invoice on which you want to record the tax reversal.
Leave the Amount field as set by e-automate. Should be the current balance on the invoice.
Click [QuickAdd] to add the invoice to the Record Customer Payment window.
Select the invoice from the list and click [Edit] to open the Edit Accounts Receivable Receipt Detail window.
Complete the following fields as appropriate:
In the Apply to credit memo/invoice field, verify you have the correct invoice.
In the Amount to apply field, enter zero.
In the Terms discount amount field, leave at zero.
Select the Reverse sales tax checkbox.
Note: In the Summary box, e-automate displays the Tax Adjustment line for the tax credit being created.
Leave the remaining account and department fields as currently set.
Click [OK] to close the Edit Accounts Receivable Receipt Detail window.
On the Invoices tab, verify the Balance column reflects a zero balance due and the Tax Adjustment column displays the tax adjustment for the invoice.
Click [OK] to record the payment and the tax adjustment.
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