Sales Tax Payable Issue

by J.D. Nesbitt
(Indianapolis, IN)

I have muddled through my first Sales Tax calculation. I understand how it works and why it works the way that it does. I cannot seem to drill down to get more detailed information about where my entries go in QuickBooks.

For instance, when I click Manage Sales Tax in the Vendor section of the Home Page and then click Pay Sales Tax, the amount in the amount due column does not match the amount that the sales tax liability report shows me, nor does it match what I should be paying once I have calculated what I should be paying. I know that it should be slightly off as QuickBooks does not calculate the Discount for me. I know that for that to show correctly I need to make a GL entry to reduce the Sales Tax Payable. My problem is that I am off more than that, something like $300. I tried "auditing" all the invoices that we received payments on in May (we work on a Cash Basis)and I cannot find the discrepancy.

Where can I go to find the offage and get to the bottom of it so I can correct it?

Any help you could give me would be greatly appreciated. I have only been with the company a month and while I am degreed in Accounting, the guy I replaced was not! :-( Needless to say, some of his previous steps taken were pretty screwy.

Thanks so much in advance for any assistance you can give. This would sure beat my boss having to pay $225 an hour for the CPA to discuss this with me. I sort of tried that already and she didn't really know what to tell me because she does not even deal with sales tax entries that much!

-Between a rock and a hard place

J.D. Nesbitt

Jennifer replies:

Hello J.D.,

Unfortunately I cannot give precise guidance to you. The sales tax module of QB is rather inflexible and must be done exactly the way it was designed to be done, otherwise there are problems.

One thing I would do is to look up the sales tax vendor in the vendor list, and make sure that all of the sales tax payments were recorded as TAXPMT checks in the check register. If you see BILLPMT or CHK checks (or any other type for that matter) to the sales tax vendor, then that means the "Pay Sales Tax" function was not used to pay the tax. And as I already mentioned, the sales tax module must be used the way it was designed. I hope this makes sense.

If you scroll through the check register, you will see all of the different withdrawals/checks that your company makes to conduct business. Notice the left column. Each entry is labeled. Some will be labeled BILLPMT. This means that the Enter Bills/Pay Bills screens were used. You will see others labeled CHK. This means that the Write Checks screen was used. You may see GNLJRL. This means the General Journal was used. There are other too, but these are the main ones. TAXPMT means the "Pay Sales Tax" screen was used. This is the only way to correctly record the payment of sales tax in QB. It's also one of the recurring problems I see in QB - people use the incorrect screen to record a sales tax payment.

So.... it's possible that your $300 discrepancy is due to this. Give it a shot and let me know how it goes by posting a comment below. Thanks for writing.