This is not a how-to or training blog. I’m assuming the reader knows how WA State Salestax works; that WA B&O is the state business income tax; and how to file both for one business at least.
If that’s not what this blog is about, then what is it about? It’s about the following:
1. How I know Salestax Reporting is broken in QuickBooks Online.
2. Why it’s Not likely to get fixed anytime soon.
3. And lastly, What Can We Do About It?
1. How I Know it's Broken:
a). The Salestax Liability Report is the one to run. It should match the P&L total for the same period, same basis. A recent QB Online construction-business client had $520k in sales on her cash P&L. On her cash Salestax Liability Report for the same period she had only $360 in sales total. Her invoices were done correctly.
On QB Desktop the P&L and Salestax Liability Report match exactly or within 1%. I debugged that 1% difference once. It was how the software processed the payment/invoice dates. Took me hours to clean up and the discrepancy would show up on a past or future report. Just always go with the Salestax Liability Report all the time. Print a hardcopy of that report. Staple it to the back of the State Return which you print out. In case of an audit, this proves you filed correctly and with the best intent.
b). The client imagined that all of her out of state sales were on the P&L but excluded from the Salestax Liability Report. That explained the difference. However, all of the out of state sales should have been totaled in the line item “no salestax” at the bottom of the report. There was a value in that field on her report.
Non-taxable sales for WA B&O taxable customers (everyone located in the state of WA) should be totaled in the non-tax column across from the city where the customer is located in WA State.
I clicked on the value in the “non-taxable” line item. It should have been all out-of-state sales. What information went where didn't follow any format I could see.
c). Another mistake was that the various cities total was greater than the state total. Technically this can’t happen as each invoice has only one state and one city.
Some cities were duplicated with different tax rates. The client exported the Salestax Liability Report to Excel and deleted what she decided were the “wrong” cities line item. She then massaged the numbers in the “right” cities so that that city total = state total. That was a good start.
What she did in reporting the difference between Sales Tax Liablity Report and P&L (same basis, same time) as out-of-state sales is also a good idea...given you're working with what you're working with. You'll see why below.
However, no one using QB Online who needs the Salestax Liability Report to be correct can defend their numbers in case of an audit.
2. Why It's Not Likely to Get Fixed Anytime Soon:
Various features of the Salestax Liability Report have been buggy in QB Online for a long time now. This doesn’t seem to be a priority if the report is broken now.
When users had access to the city tax rate fields, I, as a user, could clean them up a bit. Now users are locked out. Intuit exclusively has control of the various cities and salestax rates for the state of WA.
This is the NEW salestax module so Intuit thinks they’re moving in the right direction.
I called to report the bug. I have Advanced VIP tech support. The tech was awesome in many ways except he did not believe me.
He repeated that no one else was complaining. I've often been the first to report a bug. Of course, he didn’t know that.
Then he said that he would have to work with me by remote access in that particular client’s database in order to verify the bug. What that means in tech language is that only after hours of exhausting every possibility of proving me wrong would he send this bug report up to Senior Tech Support. I don’t have hours to donate, period. And I don’t want to donate hours when my past efforts have been fruitless.
I asked if he was sure no one had reported anything? For one thing, I’ve reported problems before. Where they not there? Could he research this again?
He finally admitted he had one bug report. “Crazy thing. One has to click on the non-tax field inside the invoice a 2nd time for it to register on the Salestax Liability Report as a non-taxable sale. I think he may have said for out of state customers”. At this point I was losing interest.
If that’s true, that could explain why the P&L was higher, just like the client imagined. But imagine fixing that bug for invoices for $500K in sales? Imagine going into each invoice to ‘click on this one field again”, then back to your Salestax Liability Report to make sure it was now registering? And then doing it again if it didn't register. Is that not a major bug that should be fixed asap?
Plus, even if one did that perfectly it would only improve the Salestax Liability Report in QB Online, not fix it all the way.
What Can we Do About it?
a). 50% of my clients use QB Online. The new 50%. Clients who have been in QB Desktop for many years don’t switch. The get their QB Desktop version hosted for remote access.
The Salestax Liability Report works perfectly in QB Desktop.
When a client asks me to recommend which software they should use, if salestax reporting is important in their business, I morally have to recommend QB Desktop.
Which is a crying shame since sometimes they have compelling reasons to go with QB Online. But 10% salestax on $520K is $52K, and that’s not pocket change. In addition, the business has to pay WA State taxes on state sales. Then there is the threat of an audit.
b). If anyone has time, please do report your Salestax Lability Report problems. Why not let Intuit dial into your computer and help you debug it? Once they realize they can’t fix it, they should send the bug up to Senior Tech Support to fix. You won’t hear back from Senior Tech Support, but you’ll have done your good deed for the day.
Lastly, does the Salestax Liability Report in your QB Online version work perfectly? Do you have various WA state customers with and without saletax, and out of state customers too? Does it work perfectly for your business? I would love to hear that it does. Love to!