1 Topic by jeskremer (edited by jeskremer 01/02/2025 05:28:51 pm)

  • From: Canada, Ontario, Kitchener
  • Registered: 03/03/2024
  • Posts: 28

Topic: Refunding Sales Tax Paid Inadvertently by the Customer

I am paying year end Sales Tax, but have a confusing situation.

I had a few customers pay tax that should not have this year.  I would refund the Sales Tax with a Credit Note and Bank payment against the Sales Tax account.

When I run the Tax Report, however, it will only show tax refunded if a partial portion of an order or full order was refunded.  Just refunding the Sales Tax through a credit note is not reflected on here.

Is there a separate Journal Entry that I should be using to make Sale Tax report reflect a Bank Payment/Credit Note to Sales Tax Payable?

I hope this makes sense.  Thank you.

jeskremer's Website

2 Reply by jeskremer (edited by jeskremer 01/02/2025 05:52:16 pm)

  • From: Canada, Ontario, Kitchener
  • Registered: 03/03/2024
  • Posts: 28

Re: Refunding Sales Tax Paid Inadvertently by the Customer

As I am looking at this, what shows up on the Tax Report appears to be only Transactions that went through the Revenue column of the GL account.   Sales Tax Payable or Accumulated would be in the Liabilities.

In short, only 4 of my 22 credit notes show up on the Tax Report.  These four went through a Sales Return account under Revenue.  The others refunded a complete Sales Tax Payable account in Liabilities.

I can't find anything in the WIKI or forums to confirm this though.

jeskremer's Website

  • From: Canada, Vancouver
  • Registered: 07/11/2025
  • Posts: 1

Re: Refunding Sales Tax Paid Inadvertently by the Customer

hiii....
You're right , the tax report usually shows only transactions that affect the Revenue accounts, not those that directly touch Liability accounts like Sales Tax Payable.

That’s why only the 4 credit notes that went through a Sales Return (Revenue) account are showing up in the tax report. The others, which refunded tax directly from the Liabilities section, aren't being picked up.

It’s a bit confusing, but for proper tax reporting, credit notes should ideally reverse both revenue and tax, not just the tax from liabilities. You might need to adjust how those credit notes are recorded so they show up correctly. thank you