The CDR feature not only identifies the errors with using the incorrect payment transaction, but it also fixes your transactions automatically!
Before starting the tasks that are listed below, you should review the settings of the client for sales tax. In addition to that, if the Sales Tax feature has not been enabled then the Sales Tax task group will not display in the CDR.
After reviewing and correcting the sales tax preference settings your client, then you are ready to begin the following CDR task.
Fixing Incorrectly Recorded Sales Tax:
QuickBooks uses a special 'Pay Sales Tax' dialog box to record the sales tax liability payments properly. When payments are made using other transaction types, such as Pay Bills, Write Checks, or Make Journal Entries, the 'Pay Sales Tax' dialog box might not accurately reflect the payments.
Fix Incorrectly Recorded Sales Tax task will help you in identifying and correcting the transaction when your client paid the sales tax liability outside of the 'Pay Sales Tax' dialog box.
The negative line entry that includes in the 'Pay Sales Tax' dialog box when the Write Checks transactions were created, assigned to the payable liability account of sales tax, and payable to the vendor sales tax.
The properly recorded sales tax payments will have the transaction type of TAXPMT in the checkbook register.
Word of Caution: This is may be a good time to review with your client about the vendor names that are associated with different types of tax payments. Some states may have the same vendor name for the multiple agency tax payments.
You have to suggest that to your client to use a unique vendor name for each different type of tax being paid. This will avoid the CDR which is possibly correcting a non-sales-tax type of the payment made to the vendor.
What exactly is this tool fixing?
The tool will identify and fix the non-sales-tax payable type transactions used to pay sales tax liability by using Void and Replace functionality. The tool can identify the transactions of any Write Checks where the payee is the same as an assigned payee for the sales tax item.
However, this tool will not identify any vendor bill payment checks, vendor bills, or the journal entries that recording payment for the Sales Tax Liability.
If this is your first incorrectly recorded sales tax transaction fixing solution, then you might want to change the 'to' date to the today’s date. This ensures that you are looking at all the sales tax payable transactions that were improperly recorded by using the wrong transaction in your QuickBooks.
Another word of caution: If your client has multiple lines that are recorded on the sales tax payable checks, such as an additional fee for the late payment penalty or other adjustment lines, then you might want to use the link to make a manual Sales Tax Adjustment.
The Incorrectly Recorded Sales Tax tool assumes all the lines of the incorrect transactions belong to the Sales Tax Payable account.
Follow these steps to fix incorrectly recorded sales tax:
1. If you are completing the changes as a part of a dated review, then from the menu bar select Accountant, 'Client Data Review' and then launch Client Data Review. Then select the Fix Incorrectly Recorded Sales Tax task in the Sales Tax group.
2. If you are not completing the changes as a part of a dated review, then from the menu bar select Accountant, 'Client Data Review' and launch 'Fix Incorrectly Recorded Sales Tax task'.
3. Now, double-click on any transaction to see the non-sales-tax payment transaction that is originally created to make sure that it should be changed to the Sales Tax Payment. Then make note of the check number or the check date.
4. Put a checkmark in each of the transactions to be fixed. (This is optional) Use 'Select All' button or 'Deselect All' button to streamline the process.
5. Click on 'Void & Replace'. Then CDR will create a new Sales Tax Payment transaction, and it voids the original 'Write Checks transaction' or can Make General Journal Entries transaction.
6. Now click on Proceed to the 'Fix Sales Tax' message that displays to continue with the change, or you can click on Cancel to return to the CDR tool.
7. To close the message indicating that the transaction has been fixed, click on Ok.
8. Click on the 'X' which is on the top-right corner to return to the CDR Center.
9. Return to your checkbook register icon on the Home page and look for the check number or date or both to view the original transaction that voided and then the new transaction will be created as a Sales Tax Payment type.
With the Void and Replace functionality which is included in the Fix Incorrectly Recorded Sales Tax tool, you will be assured that if your original transaction marked as cleared in a bank reconciliation, then the newly created Sales Tax Payment transaction will be marked as cleared too.
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