You've paid an invoice without sales tax, as they are tax exempt. The tax remains on the customer's account and needs to be removed and recovered from a previous filing.
- There is an option in AvaTax for QuickBooks to do a tax only credit.
- It must be enabled in the configuration first.
- Go to File > AvaTax > Preferences. On the Tax calculation tab, select Credit memos/ Refunds options.
- The box next to Tax Adjustment Amount needs to be checked, in order to make it available for use.
- If you do not see this option, and your user profile in QuickBooks can make changes to the configuration, you will need to enter a credit manually in the Admin Console
- Once the Tax Adjustment Amount is enabled, create a credit memo and enter a single item, called AVATAX-SalesTaxAdjust
- Enter the amount of tax to recover and save.
- Make sure to use the original ship to address
- An entry is made in AvaTax, crediting sales tax only and distributing it to the original jurisdictions.
Note: You cannot enter a tax only credit if you are an SST customer. SST policy doesn't allow a tax only credit. You must edit the original invoice, or credit the entire sale and re-bill correctly, to resolve issues with incorrectly applied tax.