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, or Sovos GTD, or Vertex Cloud, instead of writing off the sales tax, you must use a correction.

See Correcting invoices where the incorrect exemption certificate was applied.

  1. Select Customer > Entry > Cash Receipts.
  2. Click OK to open a journal
  3. Select the Payment transaction type.
  4. Leave the Check # and Amount fields 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 Distribution view, 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.
  17. Click Save.
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