Sales Tax refund to customer after it has been filed

[Adrien Monteleone]

A refund from checking? Why?

I’d issue a credit memo for the tax then apply the memo as a payment to the original invoice. This will balance out the invoice and reduce your tax liability account. I don’t see why the checking account should enter into the picture.

The entry as a result of the original invoice should have been:

Dr. Accounts Receivable
Cr. Income (whatever account for sales you use here)
Cr. Sales Tax Liability

On payment received the entry should have been:

Dr. Cash
Cr. Accounts Receivable

Because they didn’t pay the full invoice, there should be a balance still owing on it and A/R should reflect this.

Create the credit memo and the entry should be:

Dr. Sales Tax Liability
Cr. Accounts Receivable

To apply the credit memo to the invoice, choose to ‘Process a Payment’, bring up the customer, you’ll see the invoice for a positive amount and the credit memo for an equal but negative amount. Select both (as if you are paying both) use the appropriate date, but the payment amount should be zero. (since the two amounts net to zero) You shouldn’t need to select an account to debit, but if you must, I suppose AR or Cash will do. (the entry will be zero in any case)

Now your Sales Tax Liability account shows the proper amount and you can make your payment.

*note, double check the laws of your jurisdiction. Most that I am familiar with require you to report taxable sales, then figure the tax owed on that, and remit that amount. How much you collected doesn’t enter the picture unless you collected MORE than you were supposed to, in which case you remit what you actually collected. Most jurisdictions work this way so that you pay the proper tax even if you didn’t calculate and collect it properly. Tracking what you collected or are supposed to collect into a Sales Tax Liability account is mostly for informational purposes to give you an indication of what the liability might be. The actual liability is usually determined by filing out the form.


Regards,
Adrien


> On Jan 5, 2018, at 11:37 AM, Donna Pfeifer via gnucash-user <gnucash-user at gnucash.org> wrote:
> 
> I’ve been looking for the proper way to handle this situation.
> In November, I invoiced a customer for a job that included sales tax. At the end of the month, I paid it to the state as required.In mid December, they payed sans sales tax and sent an exemption certificate.
> I showed the balance as paid with cash and then entered a refund for it from checking.
> But now, when I need to pay sales tax, my sales tax account is off.
> I have not reconciled December yet.
> How should this be entered? 
> Thanks in advance
> Donna Pfeifer
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.