QuickBooks Online has made its Automated Sales Tax (AST) feature an automatic setting for new QBO users. It automatically calculates tax rates based on the location on an invoice. Because we don’t initiate the integration until an invoice is sent to QBO, it may cause tax rate discrepancies in your QBO account.
Important: Not everyone has this feature activated on their account. The easiest way to tell if you have this feature activated is to check if you are able to create your tax rates in QBO. If you are not able to create tax rates, this feature is activated in your account.
What is Automated Sales Tax?
With the Automated Sales Tax feature activated, QBO checks the job address and automatically assigns the sales tax for that location. There is no place to manually create tax rates in QBO. Instead, it requires you to enter your business address and add in the correct tax agency. It calculates the rest.
How Does Automated Sales Tax Work?
If Quickbooks Online determines that you've applied the incorrect sales tax for a job created in HCP, QBO will then overwrite the rate you’ve chosen with the "correct" tax rate, based on their Automated Sales Tax calculator. This will adjust the amount on the invoice in QBO.
If the Automated Sales Tax rate is higher than the one applied (and the invoice has been paid for in HCP), it will show an outstanding balance in QBO. If the Automated Sales Tax rate is lower than the one applied (and the invoice has been paid for in HCP), it will show a credit on that customer's account in QBO.
If you believe that Quickbooks Online is forcing you to use a tax rate that is incorrect, you must contact Quickbooks Online. The only way to get the feature turned off is to prove that there is a flaw. You can take the guesswork out by using their sales tax calculator.
If the invoice HAS NOT been paid for:
You can change the tax rate to the rate that QBO is suggesting on the invoice in Housecall Pro before resending it to the customer.
If the invoice HAS already been paid for:
You can override the Automated Sales Tax rate on transactions within your QBO account. Once you override, there should no longer be a discrepancy between Housecall Pro and QBO.
To override the Automated Sales Tax rate:
1. Open the invoice detail page in your QuickBooks Online account.
2. Click the blue ‘Sales Tax’ link below the subtotal.
3. On the screen pop-out, click 'Override this amount in the bottom right'.
4. Enter the dollar amount or percentage you wish to use as the tax rate, select a reason from the drop down, then click 'Confirm'.