If you need to make a correction to sales tax charged, there are two methods that can be used to record the adjustment.
If you pay more than one sales tax rate you should use method A. Method A will provide you with the most accurate paper trail and will make calculating your sales tax payable easier. Method B can be used when you only pay a single tax rate. You will have to make adjustments to the Sales Tax Report that is provided by The BUSINESS EDGE when you use Method B.
Method A
You will need a miscellaneous Non-Stock Inventory item setup if you do not already have one. An example would be /ADJ or /MISC. The / indicates to the system that it is a Non-Stock Item. This type of part can be used to make any type of credit or debit to your customer when you do not want to affect Inventory.
In the Customer Master Record there are four possible Tax Authorities, Regular, Service, Custom and Other. The Regular Tax Authority is used when your Customer purchases Inventory. The Custom Tax Authority can be used when you need to Credit or Debit Sales Tax. If the regular Tax Authority for a Customer is Taxable, the Custom Tax Authority should be setup as Non-Taxable and visa-versa. The Custom Tax Authority should always be the opposite of the Regular Tax Authority. You can check or edit the Tax Authorities in the Customer Master Record in Enter & Edit Customers, F9-Tax.
The next step is to enter an order. The Order will have two lines items. Both line times will use the miscellaneous Non-Stock Product discussed above. The dollar amount for each line item is the total amount you are adjusting the tax for. In some cases that may be the entire invoice. If your customer is only adjusting the tax on specific line items the amount of each line will be the total dollars for those items. One line item will have a negative quantity and the other will have a positive quantity. One line item will be taxed and the other line item will not. If you are creating a credit for Sales Tax, the negative quantity must be on the line that you are charging tax. If you are creating a bill for Sales Tax the negative quantity must be on the line that you are not charge tax. The dollar amount for both line items should be the pre-tax amount billed on the original invoice.
By default, the system will apply the Regular Tax Authority to the line item you are entering. You will need one line item to use the Regular Tax Authority and the other line item to use the Custom Tax Authority which is setup to be the opposite. To change the Tax Authority on a line item, click on UOM and Taxes and then Tax Type while you are entering the line item. An example of this screen you will see when you click on Tax Type is below. To change the tax authority on a single line item, simply click on the down arrowr at the Tax Type Prompt and select Custom.
Now you are billing one line item with tax and one line item without tax. The difference will be the balance due which will either be a negative or positive tax amount. After allocating, creating an invoice and updating all of the accounting will be handled for this transaction.
Method B
This method is only recommended if you pay a single sales tax rate. This method is quicker but does not give you the paper trail that you get would get using method A.
If a Customer is adding or subtracting Sales Tax at the time of payment you can simply make an adjustment when you are entering their check. While paying their invoice in Enter & Edit Deposit, press enter on the Invoice that they are paying. The Invoice Payment amount should be the amount that you are removing from Accounts Receivable. The G/L Adjustment Amount is the amount of Sales tax that is being added or deducted from the payment. If they are adding Sales Tax the G/L Adjustment amount is a negative amount. If they are deducting Sales Tax the G/L Adjustment amount is a positive amount. The Distribution Account is the G/L Account Number for Sales Tax Payable.
If you use this method, you will then have to adjust you payment to the state that you are paying Sales Tax to. You can get a total of all Sales Tax adjusted for a period of time by printing the Sales Tax Cash Receipts Report, Summary Only.
