The third is to create a credit memo, and finally, the fourth is a 12-step process for entering a sales tax adjustment to zero out the sales tax. You can then assign a credit or process a refund. The second option would be to modify the original invoice by changing the item from taxable to non-taxable. You can then either apply the amount to a future invoice or directly refund it. The first way to reverse incorrect payment of sales tax is to rebill the customer by creating a new invoice that will show the same items purchased but now marked as nontaxable and apply the credit to the invoice. If it’s a high-price tag purchase, an SMB or ESB may not have the budget to cover the tax, even temporarily.Ĭrediting the sales tax can be done one of four ways, and a customer may find any one of them bothersome. But the customer likely won’t appreciate paying undue sales tax regardless of being credited later. If you can’t rectify an exemption certificate but want to push the sale through, you may have to charge the customer sales tax and then credit or refund the tax paid. Your staff could be working on other priorities rather than spending unnecessary hours fielding certificates.Ĭredits can lead to satisfaction deficits Poorly managed exemptions can also decrease internal efficiency, costing needless time and money. What if a customer needs your product or service for an important event or another deadline-driven purpose? Not all customers will wait around while you authenticate certificates. If you must delay customers’ purchases to handle exemption certificates, you’ll risk aggravating customers or losing them altogether. Let’s look at a few ways that poorly managed sales tax exemption certificates can hinder customer satisfaction and retention for SMBs and ESBs. Too often, companies don’t think of the tax exemption process as part of the customer experience, but it is. In that case, they’ll most likely have to issue a credit or rebill - and most likely spark customer frustration.Įxemption credits, rebills, errors, and subsequent complaints tend to be top challenges for many small-to-medium businesses (SMBs) and emerging small businesses (ESBs). Suppose an organization makes errors or cannot validate a certificate in real-time at the point of purchase. But with the speed of ecommerce today, customers expect efficiency and accuracy in all manner of sales, including exemptions. In the not-so-distant past, businesses typically emailed or faxed certificates and had staff verify them. Tax exemption certificates certify that an organization is not liable for a usually taxed product or service.
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