Sales Tax Liability Report

by Kathy

I have a question about the sales tax liability report being wrong.

At times, we find it necessary to purchase items from vendors and are charged sales tax. We then turn around and sell item to customer and charge him sales tax. I took the deductions on my monthly sales tax last month, but now my Sales Tax Payable and Sales Tax Collected do not match on the Tax Liability Report. I’ve traced the amount to that particular deduction last month.

I posted the amount as:
Debit to Sales Tax Payable (reduced my taxes)
Credit to Job Income (increased my income & sales)

The Credit increased my Income on the P&L, but did not increase my Total Sales on the Tax Liability Report, which are supposed to match (right?).

I believe I’m using the wrong account to post the Credit, but cannot figure out where it should go.

Reply:

The Sales Tax Payable column of the Sales Tax Liability report is only impacted through the use of Sales Tax items. As a general rule it is not a good idea to post sales tax transactions via the general journal because it skews the liability report, as you are finding.

I think the correction needs to happen on the vendor’s bill. Try adding a sales tax item to the bill. Be careful: do not change the bill amount. You can toggle back and forth between the Expenses Tab and the Items Tab to get the amount correct.

I hope this answers your question about the sales tax liability report. Let me know by leaving a comment below. Thanks.

Click here for personal help with Sales Tax Liability Report.

Comments for Sales Tax Liability Report

Sep 16, 2011 Sales tax filling 

by: Anonymous

To do the sales taxes what amount should I be using the total tax collected or the Sales tax payable? and are those 2 amounts are suppose to match?

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