Process to properly refund tax

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1

Good day,

One of our employees put tax on an invoice that was not supposed to be taxed. What is the proper procedure to refund the tax back to the client account to offset the tax?

2

@kwall222

Thanks for reaching out about this. I’m checking with accounting on best practices here. I’ll get back to you ASAP with an update.

Thanks,

Cetec ERP Support

3

Thank you!

4

@kwall222

The best practice here would be to create a credit memo for that customer with the exact amount of tax. Also set the GL account to be the sales tax liability account. Then apply it to the invoice and process the payment.

Let us know if you have more questions.

Thanks,

Cetec ERP Support

5

What I’m worried about is proper tracking in our sales tax reports. We want to make sure our tax liability is accounted for in that report. Is this possible?

6

@kwall222

I talked to accounting more and we have a process.

If the sales tax was already reported in a prior period, then the proper way to credit back sales tax, to include it on the Sales Tax report, is to credit the invoice as it was originally invoiced, then rebill it as non-taxable.

If it’s in the current period and has been paid, then credit the invoice as it was originally invoiced, then rebill it as non-taxable.

If the taxable invoice was in a current period and it has not been paid, Uninvoice it, change the order to non-taxable and Invoice it (no harm, no foul).

Let me know if you have more questions.

Thanks,

Cetec ERP Support

7

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