When a sales tax rate changes, the Tax Item rate can be updated in System Settings. Open Estimates retain the previous tax rate until their Tax Settings are refreshed. This article covers updating a Tax Item rate and applying the updated rate to an open Estimate.
Table of Contents
- Important Information
- Updating a Sales Tax Rate
- Refreshing Tax on an Open Estimate
- Frequently Asked Questions
- Related Articles
Important Information
Changing a Tax Item rate updates the current Tax Item. It does not automatically change tax on open Estimates. Each open Estimate keeps the tax that was in effect when that Estimate was created until you update Tax Settings on that Estimate.
Invoices and other completed documents keep the tax rate that applied when they were created.
New Estimates use the current Tax Group rate.
After a rate change, the Tax Group dropdown on an Estimate can show two groups with the same name and different percentages. Select the Tax Group that shows the new rate. For more information on Tax Items and Tax Groups, see Tax Items and Tax Groups.
Updating a Sales Tax Rate
Navigate to System Settings / Accounting / Tax Items.
1. Click the Tax Item you want to update.
The Edit Tax Item dialog opens. Fields marked with a red asterisk are required.
a. Name - The name that identifies the tax agency.
b. Name on Documents - The name Customers see on Estimates and Invoices.
c. Associated Tax Groups - The Tax Group or Tax Groups that include this Tax Item.
d. Municipality Name - Optional. Internal reference for the tax agency. Customers do not see this field.
e. Account Number - Optional. The sales tax liability account number.
2. Enter the new Tax Rate.
3. Click Save.
Refreshing Tax on an Open Estimate
Navigate to Sales / Estimates and open the Estimate.
1. Click Tax in ORDER TOTALS.
The Tax Settings dialog opens.
a. Tax Group - The Tax Group assigned to this Estimate. The percentage shown is the rate currently on the Estimate.
b. Tax ID - Optional. The Customer tax ID, when you have one to record.
c. Order is Tax Exempt - Marks the Estimate as tax exempt.
d. Tax Detail - Choose By Authority or By Line, and open Authority Breakdown when you need the tax split by agency.
2. Select the Tax Group that shows the new rate. If two groups share a name, choose the one with the updated percentage.
3. Click Save.
Note: Repeat these steps on each open Estimate that should use the new rate. There is no bulk refresh for all open Estimates.
Frequently Asked Questions
1. Does changing a Tax Item rate update all open Estimates?
Answer: No. Open Estimates keep the original tax until you update Tax Settings on each Estimate. New Estimates use the current Tax Group rate.
2. Why do I see two Tax Groups with the same name?
Answer: After a rate change, the Tax Group dropdown can list the original rate and the new rate under the same name. Select the Tax Group that shows the percentage you want to apply.
3. Do Invoices change when I update a Tax Rate?
Answer: No. Invoices and other completed documents keep the tax rate that applied when they were created.
4. Do I need to change Tax Settings if I only update the Tax Item name?
Answer: No. A name-only change does not change the rate on open Estimates. Refresh Tax Settings when the percentage on the Estimate should match the new Tax Item rate.