QB Issue Resolution:

The sales taxes to the State are not paid per customer name; that doesn’t impact anything.

Your adjustment in the current period simply changes the total you owe in the current period, but your change is per customer name in your data.

You can create a credit memo for the total amount of Sales that were taxed, using a generic Other Charge item and set it to link to an income account of some sort. Use this item as Taxable for the prior Sales; then with a negative total and as Nontaxable.

The difference will create an AR credit for the Taxes only. Apply this credit to the open invoice balance(s) and this will also create an entry for your total sales taxes due, similar to any return.

The positive Taxable credit is the same as a regular Return activity.

That “negative nontaxable” credit is the same as what should have been the original sales, nontaxable.

Resolution for Issue 'customer is tax exempt – invoiced with sales tax, tax paid to state' available: Yes (Solved).
Source: Intuit Community forum.

customer is tax exempt – invoiced with sales tax, tax paid to state: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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