Writing off sales taxes after an invoice is paid

Use Customer Cash Receipt Entry to write off sales tax after an invoice is paid. For example, if a customer is nontaxable, but their invoice total included sales tax, you can write off the sales tax amounts and credit the correct tax accounts. Assuming the customer has already paid the invoice, minus the tax, the remaining amount on the invoice is the tax amount, which you will write off. This write off may be necessary if the customer does not submit their tax register number until after they have submitted payment. Ideally, you should also change their taxable status in Customer Setup to avoid write-offs in the future. You must have correct security in SA Operator Setup to write off cash receipts.

Note: If you use AvaTax, Sovos GTD, or Vertex Cloud, and clear the Post To Tax Interface For Tax Writeoffs check box on the SA Administrator Options - Customer - Cash Receipts screen, you must use a correction instead of writing off the sales tax.
  1. Select Customer > Entry > Cash Receipts.
  2. Click OK to open a journal
  3. Select the Payment transaction type.
  4. Leave the Check # and Amountfields blank, since the check and amount have already been processed.

    If the message, Warning: Applying With a Check # of Zero, is displayed, click OK.

  5. Select the Customer type.
  6. Specify the customer number.
  7. Click Next.
  8. In the grid, select the invoice to be written off. The remaining amount shown on the invoice is typically limited to the total tax amount.
  9. Click Paid In Full, or if the amount available is zero (Avail: 0.00), select the check box in the Paid In Full column in the grid.
  10. Press Tab.
  11. In the Apply Amount field, specify 0 (zero).
  12. Press Tab.
  13. In the Write Off Distributionview, specify a write off GL account in Account.
  14. In the grid, select the invoice.
  15. Click Writeoff Tax.
  16. Verify the accounts, and then click Done.

    The Update Tax check box is automatically selected. This indicates that the tax write-off data must be posted to the third-party tax systems.

    Note: 
    • The Update Tax check box is displayed only when the following conditions are met:
      • The third-party tax systems such as Sovos GTD, AvaTax, or Vertex Cloud are used.
      • The Post To Tax Interface For Tax Writeoffs check box is selected on the SA Administrator Options - Customer - Cash Receipts screen.
    • The Update Tax check box is enabled only after the Writeoff Tax is applied.
    • If the Update Tax check box is cleared, the tax write-off data is not posted to the third-party taxing system. You must manually update the tax-exempt information.
  17. Click Save.

    A note is created for the associated sales order that includes the write-off date and amount. The Sales Order Master List report also includes the tax write-off data.

    The following transactions are created and sent to the third-party tax system:

    • A reversal transaction for the original transaction associated with the invoice that is being adjusted. The transaction number includes the RV extension.
    • A zero-rated transaction to indicate that the entire amount is an exempt. The transaction number includes the WO extension.
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