Show/Hide All

 Overview

Use the following procedure to credit a customer that has been charged sales tax by mistake.

 

To reverse sales tax charged on an invoice

1. Select Sales Order Main menu > Invoice Data Entry.

2. In the Invoice No. field, enter a new invoice number. For more information, see S/O Invoice Data Entry - Fields.

3. At the Invoice Type field, select Credit Memo.

4. At the Customer No. field, select the customer and verify that the tax schedule is the same as used on the original invoice.

5. At the Apply to Inv # field, enter the original invoice number.

6. On the Lines tab, enter the same item from the original invoice, but use a negative quantity and mark the item non-taxable. Enter a second line with the same item, positive quantity, and mark it taxable.

7. On the Totals tab, the amounts should be the same in both the Taxable and Non-Taxable fields. The sales tax and net invoice amount should be showing as a negative amount for the amount of the sales tax.

8. Print the invoice.

9. Print and update the Sales Journal and Daily Transaction Journal. This will credit Accounts Receivable and debit the sales tax payable account. The sales tax report will also be corrected.

The sales tax charge is reversed for the invoice.