Sales tax: rates, the centre, and the liability report

Where the rate comes from, which lines it applies to, what the tax centre owes versus what a period report shows, and the warning you get when no rate exists.

Taxes → Sales Tax Center. Rates and agencies: Settings → Sales tax.

Where the rate comes from. A company created with a state gets that state's agency and a default rate at once (Maine 5.5%, New York 4%, and so on); filling in the state later under Settings → Company seeds it then. A document uses the default rate unless a line or the customer says otherwise. Rates are basis points on the taxable base; each line's tax is rounded to the cent, so the document total is the sum of its lines.

Which lines are taxed. A line is taxed when three things are true: the line is marked taxable, the customer is not exempt, and a rate exists. A non-taxable line (labour, freight, a service the state does not tax) still shows the rate on the form so you can see what would apply, but carries no tax and is reported as exempt. An exempt customer (Customers → Tax status) pays no tax on any line.

The warning. A company with taxable lines and no rate would post the invoice with $0 tax and never see it on a return. The invoice form says so — Lines are marked taxable but no sales-tax rate is set up — with a link to set one up, and the saved document carries the same warning. Nothing is blocked; the liability is simply not hidden.

A header discount taken before tax reduces each line's taxable base in proportion, and the tax is computed on the reduced base. The liability report states taxable sales on that same base, so rate × taxable base agrees with tax collected to the cent.

The centre versus the report. Accrued and unremitted on the centre is the balance of the Sales Tax Payable account across every period — everything collected and not yet paid over. The liability report is for one period. On a company with more than one year of sales the two differ by exactly the earlier periods' collections; that is not a discrepancy.

The per-jurisdiction breakdown lists each rate with its taxable base and tax. Only lines that were actually taxed at a rate count toward its base; a non-taxable line that merely carries the rate on the form does not. Row bases therefore add to the summary's taxable figure and each row's rate × base reconciles to its tax.

Filing periods follow each agency's frequency (monthly, quarterly, annual) with the due date shown. Record remittance posts the payment from the account you choose against Sales Tax Payable; an adjustment line (a vendor's collection discount, a prior-period correction) with a reason keeps the return and the ledger together, and the agency's confirmation number is stored on the return. See Sales tax and nexus for out-of-state thresholds.

Filing electronically. If you use TaxJar, Taxes → E-file (TaxJar) sends each period's sales to your TaxJar account and TaxJar AutoFile files and pays the returns — see E-filing sales tax with TaxJar (E-file).