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Dynamics 365 Community / Forums / Microsoft Dynamics GP (Archived) / Crediting Sales Tax
Microsoft Dynamics GP (Archived)

Crediting Sales Tax

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Posted on by Community Member Microsoft Employee

Frequently a customer fails to provide us with a sales tax exemption certificate so we include sales tax on the invoice. Then, when the payment is received the invoice is short-paid and accompanying the check is the previously requested sales tax exemption certificate. What is the best way to correct your records for this?

Currently, we issue a Sales Order Processing return for the amount of the original invoice including the tax. We then reinvoice the sale without tax, having changed the customer's tax schedule ID to one reflecting their tax exempt status.

While this procedure works and properly adjusts the sales dollars for the affected tax detail IDs, it is a rather labor and time intensive process. I keep thinking there has to be a more efficient way. Does anyone have some suggestions?

I tried entering a return or credit just for the amount of the tax and manually changing the Total Taxable Sales on either the Receivables Tax Entry window or the Sales Tax Summary Entry window but this doesn't get the sales added then to our exempt tax detail ID since I cannot have a negative Total Taxable Sales amount in this window (a negative negative sale to add the sale the exempt tax detail ID)  so I know I have accounted for all of my sales.

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  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Crediting Sales Tax

    Bill,

    The customer isn't someone we'll be doing business with again in the foreseeable future, as their job has ended around this area.

    The credit was just for the tax amount they had paid.

    It wasn't a check issued, it was a credit card refund. Like we ran it through the credit card terminal, so I wasn't sure how to enter that refund in Dynamics to correctly show the outflow.

    (I just started using Dynamics about three months ago, and the staff I have to learn from tend to use credit and debit memos for all the WRONG reasons, so I'm trying to make sure I'm using their functions correctly.)

  • Bill Campbell Profile Picture
    Bill Campbell 22,647 on at
    RE: Crediting Sales Tax

    Brittney, would the credit memo be for the TAX amount paid?  Would you not just apply that refund against current or future invoices?

    If they in fact want a check issued, then I would think that issuance of the check from the system would match that outflow in the bank.

    Did I miss the question ?  Sorry - loved the conversation by the way - answered my question way back at the top - but just had to read to end.

  • Community Member Profile Picture
    Community Member Microsoft Employee on at
    RE: Crediting Sales Tax

    Leslie,

    What about if they actually did pay the tax, and someone notices up the road that they paid it, and they want a refund? Obviously the CM fixes the liability issue, but what about the actual refund to match the outflow in the bank?

    Thanks!

    Brittney

  • L Vail Profile Picture
    L Vail 65,271 on at
    RE: Crediting Sales Tax

    Kirk,

    We actually reverse it against the liability. It was never collected, so we don't have to remit it. There was never any income recognized by the transaction - it only created a liability.

    Les

  • KirkLivermont Profile Picture
    KirkLivermont 5,985 on at
    RE: Crediting Sales Tax

    Hi Leslie,

    Yes this is very common. From a business standpoint it is not worth jeopardizing the account over 8.5% on one order. I recommend just writing the amount off as a bad debt but making sure all proper documentation is in hand for future orders before doing so.

    Texas has been aggressively pursuing out of state resalers since before it was cool. Other than that I am not sure how the laws differ.

    Regards,

    Kirk

  • L Vail Profile Picture
    L Vail 65,271 on at
    RE: Crediting Sales Tax

    Hi Kirk,

    Have you ever tried to get your customer to pay the tax when they forget to provide the documentation - but provided it with their payment? In my world, the customer would not pay the tax and then seek a refund, essentially that's what's happening. I live in Texas, a far cry from the rigidity of the tax folks in California. As you know, every state has its own set of rules. GP itself doesn't calculate sales tax correctly because it figures it at the line item level instead of the invoice level.

    Leslie

  • L Vail Profile Picture
    L Vail 65,271 on at
    RE: Crediting Sales Tax

    Hi Kim,

    This is exactly what I was describing for Don.

    Leslie

  • Suggested answer
    L Vail Profile Picture
    L Vail 65,271 on at
    RE: Crediting Sales Tax

    Don,

    When you get to the tax line you have to push the little blue arrow to open up the Receivables Tax Entry window. You need to fill out this window by selecting the tax detail and then putting in the sales amount on the dollar amount upon which you want to calculate the sales tax. In my example above I used $1,000 for total sales which translated into $1,000 of taxable sales. I bet the missing component was entering the total sales number. If you do that, the sales tax will calculate and there will not be a sales amount on the credit memo, just the credit for the tax.

    Kind regards,

    Leslie

  • KirkLivermont Profile Picture
    KirkLivermont 5,985 on at
    RE: Crediting Sales Tax

    I second Harry on this one. While it is technically possible to credit sales tax without having all documentation on file at the time of sale it may not be legal to do so. (I know this to be true of California but I am not sure about other states.)

    Kirk

  • L Vail Profile Picture
    L Vail 65,271 on at
    RE: Crediting Sales Tax

    Hi,

    Did you open up the Receivables tax entry window like the screenshot above?

    Leslie

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