QBO charges incorrect sales tax?

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#1
Andrew  
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806
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21-Nov-2018 5:00pm
Location:
CA
QBO comes up with a different sales tax rate than California's CDTFA comes up with. Sales tax is calculated based on the "location of the sale" field on the invoice which is filled out correctly. You can click on a breakdown to see the rates QBO fills in automatically:

CA State tax per QBO is 6.25%
CDTFA website says it's 6% (I actually called them to double check)

QBO district tax is 1%
Per CDTFA, it's 1.75%

Client undercharged taxable sales by 0.5%.

Does anyone else have this problem? Did the client fill it out wrong? I have not found a way to change the rate and it seems to be set up automatically.
 

#2
makbo  
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In The Counting House
The combined state+local rate is currently 7.25%, to which is added any additional county tax plus district (such as BART). It (the combined rate) has bounced around a lot; for many years recently it was 6.25% + 1.00% = 7.25%, but now apparently it is 6% + 1.25% = 7.25%. I don't think the exact breakdown really matters, as long as the combined total is correct. Every location in the state starts with 7.25% and then adds on any extra local taxes that have been approved.

https://www.cdtfa.ca.gov/taxes-and-fees ... istory.htm

So it looks like QBO is giving you the correct combined rate of 7.25% (not broken into components correctly, but totaling correctly), but not an additional 0.5% for the local county (or whatever jurisdiction)?

I just tested an invoice in QBO for my county in CA, it shows the 6.25% + 1 % = 7.25% combined base rate (as mentioned, a correct total but the addends are not correct for the current year, even though they were in recent years), and then an additional 1% for my county, for the correct rate of 8.25% (which I have verified). This all happened automatically, based on my business location (which is what I used for the sale location on the invoice).

As for fixing it, I see a link for "Override this amount" and then it prompts for an rate/amount and a reason from a pick list.
 

#3
makbo  
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6840
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In The Counting House
Interestingly, the combined (base) rate was first at 7.25% back in 1991, nearly 30 years ago. So while CA has a high sales tax rate in general, it hasn't gone up for a long time (except for locally-approved district taxes, and one temporary bump). Meanwhile, many sales are now of services rather than goods. Why not lower the sales tax rates on goods, and add some compensating amount for services? Spread the tax around more fairly, in other words, to match today's economy more closely, and insulate more from boom/bust cycles.
 


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