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Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Chapter 25
Chapter 26
Chapter 27
Chapter 28
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Chapter 10

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Peculiar Situations

 

Sales Tax Credit or rebate XE "sales tax:credit"  XE "sales tax:rebate"  is offered in some states, when merchants pay sales tax early.  To show this, an entry can be made directly into the Sales Tax Payable register.  The income tax consequences should be understood.  The customer has paid you money, and you keep it.  That means it is income.  In the example, ST Credit is an income account.  The date on this transaction should be within the relevant taxable sale period.  It will appear in the Pay Sales Tax box and can be included (as a negative amount) in the payment.  In this case, the check voucher is useful, for showing the components of the payment, including the credit.

Warning message may appear if a file has been converted from QuickBooks 2.  That version did not track non-taxable sales.  A Sales Tax Liability Report, over a time span that includes transactions recorded in QuickBooks 2, may give misleading information.

Different sales tax rates within an invoice can be  XE "sales taxes:multiple" handled by QuickBooks, but how do you correct the underlying problem?  What can you do about your elected public servants that set up a complicated tax structure?  With poetic irony, this chapter was written during election season. You could vote the buzzards out, but who else would get in?  That is a problem with popularly elected governments:  the country winds up being run by politicians.  Perhaps no one else wants to govern us.

Getting to the point, does the situation refer to some line items being taxed in addition to the overall tax, or is each item taxed individually, with no overall tax?  If there is no overall tax, a sales tax item, with a zero rate, and a name like Separate, is needed for the bottom of the invoice.

Either case will require sales tax items to be entered in the columns, like other items.  Sales tax items are usually percentages, and percentage items always apply to the one non-percentage item found first above.  Definite includes subtotals, but excludes percentages. For one business item and one tax, just put the tax below the business item.  To collect several business items together and levy one sales tax, use a subtotal and then the sales tax item.  Chapter 6 describes the workings of sub-total items.

Sales tax cannot be calculated correctly: Tax rates  XE "sales taxes:tiered rates" in several tiers, or similarly complex situations, may preclude automatic calculation of the tax.  As in the case above, the box at the bottom will show a zero-rate sales tax item.  Then the operable tax will be entered as a line item.  The necessary dollar amount can be edited into the Amount column. (The redundancy here is to avoid ambiguity.)  Because you have overridden the rate, a warning message will appear. Essentially, it is cautioning you that you are doing what you need to do.

Composite tax item, paid to several  XE "sales tax:paying multiple agencies" agencies, requires two tricky steps.  This is another case that requires a clearing account.  The composite item is set up to pay a dummy agency. (Please withhold your comments.)  Pay Sales Tax is then directed to write a check to that agency, from the clearing account.  Separate checks are then written from the real bank account, but each of these checks names Clearing as the opposing account. These checks will name the actual tax agencies.  Manual calculation is required to apportion the tax among the agencies.  Note that one item handles these taxes, so the Sales Tax Liability Report will show all of them in one locale.

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Last modified: May 21, 2004