Effect on Sales Tax Liability Report and Pay Sales tax page if Credit memo for Sales Tax Refund is Issued

Given: Credit Memo for Sales Tax Refund was issued and this is to be reflected on Sales Tax Reports

The credit memo will just have the effect of offsetting the invoice for the customer for whom sales tax was refunded to. The effects will wash out in the report, since the tax due amount is cumulative.

The Pay sales tax page will have an amount once the amount of the credit memo has already been offset by a new sales tax invoice i.e. the page will only have an amount once the tax due column is positive again.

See below for sample computation:

In the example below, sales tax charged for the whole invoice = 9

 

	(Periodic)	(Cumulative)
	Tax Collected	Tax Due
Month 1
Invoice in Month 1 (to be refunded)	9	9
Total Before payment, Month 1	9	9
Payment in Month 1	0	-9
Total After payment, Month 1	9	0
Month 2
Other invoice 1 in Month 2	9	9
Other invoice 2 in Month 2
CM in Month 2	-9	-9
Total Before payment, Month 2	0	0
Payment in Month 2	0	0
Total After payment, Month 2	0	0
SUMMARY	Tax Collected	Tax Due
Invoice	18	18
Credit memo	-9	-9
Payment	0	-9
	9	0

  

Related article: Issue Credit Memo for Sales Tax Refund and Have It Reflected on Sales Tax Report