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Why is my previous QuickBooks GST/HST ‘File Sales Tax’ journal entry incorrect?

ISSUE: the journal entry that QuickBooks automatically creates when filing sales tax is not entered correctly. The most common problem is missing tax items. You may also see missing information on the memo line, and you may even see the tax items switched around.

This happened to one of my clients this week. He noticed an ‘unassigned tax amount’ when attempting to ‘file sales tax.’ He clicked on the amount and it took him back the journal entry that QuickBooks had created for the previous sales tax filing. We then started to uncover some strange errors…

Here’s a screenshot of what a normal FILE SALES TAX journal entry should look like:

Correct JE for File Sales Tax

And here are two screenshots of the incorrect FILE SALES TAX journal entries discovered in my client’s file:

Incorrect JEIncorrect JE #2This is a known issue. QuickBooks senior tech support tells me it’s essentially random. It started with the 2012 R12 update and the 2013 R4 update. It’s considered a critical issue with moderate severity and high impact. The engineers are working on completely removing this issue. 

SOLUTION: Go back to the incorrect journal entries that QuickBooks created and manually correct them. Review previous, current, and future tax filings carefully.

My advice until Intuit works on eliminating this potential problem is to keep current with your updates and CHECK YOUR ‘FILE SALE TAX’ WINDOW CAREFULLY BEFORE FILING! Watch out for unassigned tax amounts. If you have any, drill down on the amount. If you end up in a previous ‘File Sales Tax’ journal entry, and you spot something wrong, you’ve likely encountered the ‘File Sales Tax’ bug! You will need to correct the journal entry by entering the correct tax items. If you discover information missing from the memo line, correct that as well. You can refer to previous filings for missing information.

NOTE: these errors carry over to the next sales tax return. If you discover more than just the last “File Sales Tax’ journal entry incorrect, your previous filings with the CRA could have errors.

Other tips for spotting errors in the File Sales Tax window: Manually multiply line 101 by the tax rate in your province for a ballpark figure of what line 103 should be. Drill down on line 103. Look for a balance leading into the period. This will be zero if you have not made changes to your sales after your last filing. Drill down on line 106. Again, look for a balance leading into the quarter. This will also be zero if you haven’t made any changes to your purchases after your last filing.

Be careful when troubleshooting your sales tax, and always make a backup of your file before making any changes.

I’d love to hear from you if you’ve run into this particular bug!

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31 thoughts on “Why is my previous QuickBooks GST/HST ‘File Sales Tax’ journal entry incorrect?

  1. Brenda Mayert on said:

    WOW! I saw your blog on this days ago but did not think this was the problem because everything was correct EXCEPT that the Tax Item column has nothing in it. Now after 2 hours of analyzing books I just took over from someone else, therefore, assumed she must have made a mistake (which now that it may be a QB deficiency I do not feel is right to charge my client grrrr). I’m going to make a back up and see if I can add the tax items to solve the problem. After problems with my iphone following their latest update I am quite fed up with technology today! Thanks soooo much for your help….wish me luck!!
    brenda

  2. It’s a strange bug, that’s for sure! I’m glad you found my post, and I hope you can get it all straightened out. Good luck!

  3. Brenda Mayert on said:

    It worked!! Of course it worked. Thank you again. I don’t think I would have figured it out because the little arrows were not there indicating an item should be chosen and when we’re making transactions you just know the program wouldn’t let you advance without picking the item…QuickBooks itself can though!?? Moving on! Great work!

  4. Woo hoo! That’s what Ron Baker calls an HSD – High Satisfaction Day! Good job!

  5. Paige Turner on said:

    I’ve been having this same issue at work and it’s becoming quite tiresome to have to change it manually each month. Quickbook’s support has not been much help at all. Has anybody figured out a way to fix this issue permanently?

  6. Hi, Paige. R8 has been the most recent update since this blog post (released in June), so I don’t think it’s been fixed for 2013. I’ve actually seen it ‘resolve’ on its own, although I check this very carefully all the time now! I’m wondering if upgrading to 2014 might solve this issue.

  7. Theresa on said:

    One of my clients has been having this issue constantly for the past year, so I am really glad to have run across this site just before I was heading over there to fix the issue again. She will be happy to know it is not her causing the problems. Thanks!

  8. Patricia on said:

    Thank you, thank you, thank you! I was stressing over what I had done incorrectly and just couldn’t figure it out. Now I can relax.

  9. Does anyone know if this problem affected Quickbooks 2011? I am taking over the books with a company that is very behind for an audit and the outgoing administrator is saying that there’s an HST problem that would be solved by updating to the 2014 version. Since conventional wisdom would be to not update software just before an audit I was skeptical. I have done a few entries and the HST seemed to be calculating perfectly.

  10. Marnie,

    I’ve been using QB for a little over a year (newbie). Here is another oddity related to HST that is causing me some headaches. I hope you can help me.

    Last year (2013 filing) I did everything manually filing out the HST forms online and paying via the online facilities at the bank. I recorded a general journal entry for the payment. All of the books appear correct. The GST/HST payable account shows the payment and the account balance decrease as one would expect.

    This year (2014 filing), I decided to file the HST using QB. It wasn’t until I got my notice of assessment back that I realized the QB generated tax agency report was in error. The detailed report starts the Line 103 GST/HST collected calculation with a balance equal to the amount from 2013 (which was paid and recorded using the journal entry). It then adds in the amounts for 2014.

    Is the corrective action to replace the journal entry for 2013 with one that looks like proper entry in your post above?

  11. Hi, Dave. If this was a brand new set of books, then yes, the correct action would have been to file 2013 using the QB sales tax module, which would generate a proper journal entry (which would of course include an accounts payable entry). If you decide to correct this, you’ll have to delete the current filing, file for 2013, and then re-do the 2014 filing. Make sure you back up your books before doing any of this!

  12. Hi Marnie. I finally had some time to work on my books. Deleting the manual entry and using the autofiling for 2013 fixed up the entry for 2014. Many thanks.

    However, I did notice something peculiar that may require manually filing the HST anyway. Argh! Line 101 of the HST return is including investment and dividend income. As well, Quickbooks doesn’t appear to handle the quick method for HST which I want to use to pocket some extra cash :-).

  13. Hi, Dave. My pleasure, glad it helped! I’m going to assume you’re using a journal entry to record your investment income. Don’t! Use a deposit instead. Deposits don’t show up on line 101.

  14. As for the Quick Method for HST…let me get back to you 🙂

  15. You are correct that I was using journal entries for the investment income. I will switch to using deposits to clean up the GST file. Fortunately there are not that many entries to correct.

  16. Marnie,

    I previously set up my investment account as an “Other Asset” with 3 sub-accounts Available for Sale Securities, Cash, and a Market Value Adjustment. This arrangement was suggested on one of the forums. Unfortunately, the deposit window does not allow me to select the investment account. Any suggestions?

  17. Good news. If you change these to “Other Current Asset” accounts, they’ll be available in the deposit window.

  18. Hi Dave my friend Eileen has produced a video on the GST/HST Quick Method. Here’s the link to purchase if you’re interested: http://www.taxdetective.ca/master_quickbooks/QuickMethod.html

  19. Paige Turner on said:

    Hey Marnie & others,

    I just wanted to let you know that I am still following this post, hoping that one day Quickbooks will solve this issue! I’m currently running QB Pro 2015 and still having to manually adjust the tax items and memos for every other GST return Journal Entry. Was hoping the latest update would fix it!

  20. Really Paige? I’ve heard of this happening once or twice but repeatedly is definitely odd. Have you contacted tech support?

  21. Paige Turner on said:

    I did when it first started happening and the guy that I was speaking with had never heard of this problem and was unable to fix it. At this point I’ve just made it a part of my routine to check the journal entry after each filing. Perhaps I’ll give them another try when I’m in a good enough mood to deal with QuickBooks support. 🙂

    Note that I’m working with about 9 different companies and it seems to be 1-2 per month that have this issue, seemingly random.

  22. It’s such an obscure and strange problem, and I honestly rarely see it! I guess you’re just lucky 😉

  23. That would be indeed be good news but Quickbooks will not allow me to change an account type when it has sub-accounts, nor will it let me change the sub-accounts first. I suppose I could recreate these accounts with using “Other Current Asset” (not that many entries), but this is *moot* without a QB option for using the quick method. I may recreate the accounts anyway to keep my accountant happy (my brother).

    There is a good explanation of how to set up the accounts for the quick method here:
    https://community.intuit.com/questions/565561-using-the-quick-method-for-gst-hst

    Thanks for the information!

  24. Easy. Un-nest the accounts, change the type, and re-nest. Take a screenshot first so you remember the hierarchy.

  25. Marnie,

    I went off and searched the forums and came to the same solution :-).
    Deposits seems to work fine. I’ll have to clean up a dozen or so entries for last year.

    Thanks.

  26. Marnie,

    Do you have a recommended setup for recording stock, bond, and mutual fund transactions in quickbooks? It’s certainly not one of QB’s strong points :-). My current setup is deficient since recording capital losses cannot be done with deposits (hence they show up on the GST report as income).
    I have seen people recommending using inventory to track stocks. Or would you recommend using Quicken for this (which I own as well) and importing a summary quarterly or annually?

    Dave

  27. Deb Menken on said:

    Was trying to file my HST for this quarter and encountered the File Sales Tax bug! Your post was helpful in guiding me as to my error but it still took me 2 days of playing around to figure out out to fix it.

    I have Quickbooks Easystart and although it does the trick for us, it is not very intuitive to use.
    So I thought I would document the steps that I took to correct the problem.

    Problem: I was getting the message that my sales tax was not ready to be filed. There was an outstanding amount that was not assigned.

    Investigation:

    After a bit of digging it became apparent that the amount in question was exactly the same as was on my line 103 in my previous return.

    Googling, I found your post from July 31, 2013 that was exactly my problem. Unfortunately those screens don’t look like the Easy Start screens.

    Digging around some more I finally figured out how to get the the GST Payable register (Company, Lists, Chart of Accounts, GST Payable)

    Looking at the screen I could see that the memo was different than it was supposed to be and different from previous HST filings.
    So I corrected the memo (wondered how this could possibly help) and retried to file. Same problem. No surprise.

    More googling, more reading, no success.

    Went back to my GST Payable register and tried double clicking the entry. Voila there it was! But I wasn’t sure what to change.
    Go back, find the previous HST entry, double click, take a picture with my ipad.
    Now go back to first entry and I could see the tax item was missing. Put in the GST on Sales item. Save the change. (got a message about it being an inactive item, chose option to “use it once”)

    Go back to File Sales Tax and lo and behold the problem is gone!
    Thank you for pointing me in the right direction!

  28. Jeannine on said:

    Thank you so much! I have QB 2016 and it is obviously still an issue! First time this has happened to me (that I am aware of) your tip solved the problem.

  29. I’m glad it helped! Remember to keep an eye on things going forward. It’s unfortunate this continues to be an issue.

  30. doug on said:

    why are sales per hst report less than sales per income statement by a lot?

  31. Hi, Doug. I suggest running a Tax Agency Detail Report and a Profit & Loss Detail Report so you can compare the two. This can happen for a few different reasons, and comparing the reports will help you pinpoint why.

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