Sales Tax Refund: How To Issue Credit For Sales Tax

New Sales Order – Sales Tax Refund

In order to use this feature, you must first have two miscellaneous charges set up for each location as described below.  Clicking on this new menu option will produce a pop-up prompting you for the taxable amount of the sale (not the amount of the Sales Tax).  When you fill in the taxable amount of the sale and click the OK button on the pop-up, the system will add the two miscellaneous charges pre-filled with the price you input as the taxable amount of the sale.  You should then verify that the sales order is using the appropriate tax group that was used when the customer was initially charged the sales tax.  The result of this process is offsetting positive and negative sale amounts, one being taxable and one not, which will produce a negative amount of sales tax. Using this method to refund the customer for sales tax will also correct your Sales Tax Detail Report to reflect the appropriate amount of taxable and non-taxable sales.

The required Miscellaneous Charges should look like the examples below.  The spelling in the Short Name field must be EXACTLY as seen in the screen shots below.  The Tax Type MUST be set as seen in the screen shots below.  Use whatever Revenue Type GL account you wish but choose the same account for both.  The resulting accounting entries from this process will create equal debits and credits to this account, netting to zero.

EXAMPLES OF MISCELLANEOUS CHARGES

Sales Tax Refund Always Taxable

Sales Tax Refund Never Taxable

To add the Miscellaneous Charges, navigate to Company à Location Support Lists à Miscellaneous Charges

Click Add New

See the examples above of each Miscellaneous Charge.  If you are a multi-location dealer these Miscellaneous Charges must be setup in each location.

In this example we incorrectly calculated Sales Tax of $82.71 based on the sale price of $1,378.49.

See the steps below to issue a credit in the amount of -$82.71 to the customer.

Steps

Create a New Sales Order for your customer by going to Inventory > New > Sales Order

Select the Customer

Press Sales Tax Refund button to upper right

You will be prompted for the Taxable Amount of the Sale.  Enter the amount of the sale as shown below and press OK.

The system will add the two Miscellaneous Charges which should equal the amount of Sales Tax to be refunded. You must either Save the Sales Order to calculate the Sales Tax refund or press the Subtotal button at the bottom of the screen.

Sales Tax refund in the amount of -$82.71 equals the original amount of Sales Tax charged.  Convert the Sales Order to an Invoice and settle accordingly.