SALES TAX TUESDAY 2018: QuickBooks Sales Tax Error

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We are exploring a variety of Sales Tax topics as part of this new 2018 Sales Tax Tuesday series, not just the sales tax state-by-state travel log.  While we are normally writing about the sales tax, including recent changes, of a particular state based upon information and tax details provided by our friends at Avalara, the Sales Tax People, this week I thought I would mix things up a bit by discussing a QuickBooks Sales Tax Error. 

Now this error is only associated with QuickBooks Desktop software, not QuickBooks Online; perhaps we will look at some QuickBooks Online Sales Tax 'issues' in a future article of Sales Tax Tuesday 2018.

While there are a variety of common 'mistakes' QuickBooks Desktop users can make when setting up or using the built-in Sales Tax features, this is a 'technical error' not a user mistake (although the error can arise out of improper information entered by a user). 

When running the Verify utility, or while making a QuickBooks Backup with the options set to 'Fully Verified', you might encounter what happens to be a fairly common form of data corruption associated with what QuickBooks Desktop identifies as an "Invalid Sales Tax Agency" error. The QBWin.log file, which is an event logger that runs each time you launch QuickBooks Desktop, will capture the error similar to the one displayed below:

Obviously your own QBWin.log file will contain a lot of other information, and that is clearly outside the scope of this article, so the above illustration is simply to highlight what the error should look 'similar to' within your own log.

This error occurs when list damage is related to invalid information entered in the Tax Agency field for one or more non-sales tax items.  A variant of this error can also if non-vendor names, such as customer names, have been entered into the Preferred Vendor field for taxable (sales taxable) items. Many times these errors can arise as a result of the initial set-up process, or via the import of list data using the iiF import method or when using some 3rd-party software

Another variant of the error results when Vendor associated with a Sales Tax Item appears as the Preferred Agency in a non-sales tax item. We have seen this error arise in cases where users set-up an other charge type item with which to purchase 'auto tags and registrations', and the Preferred Vendor is the same 'vendor name' as their Sales Tax vendor - we recommend you set-up a unique Vendor for each type of tax (example: Oklahoma Tax Comm - Sales Tax, Oklahoma Tax Comm - Auto Registrations, Oklahoma Tax Comm - Business Taxes, etc., in all cases the 'Print on Check' name would simply be Oklahoma Tax Commission).

You must first identify the specific list entries containing the corrupted data, to do this you should carefully examine the QBWin.log file for the error (as shown above). Subsequent lines of the log will display additional information regarding the error including the damaged item name (typically appearing on the log line immediately following the error.)

If you are not familiar with accessing and reviewing the QBWin.log file, just follow these steps:

  1. Open QuickBooks (Pro, Premier, Enterprise or Accountant)
  2. Press the F2 key to open the Product Information window,
  3. Now press the F3 key to open the Tech Help window
  4. Select the Open File tab
  5. Within the Open File window (left side) scroll until you find the QBWin.log listed
  6. Click once on the log, then click the Open button on the right
  7. The QBWin.log will be opened in Notepad or Word-pad
  8. Once open press CTRL + F to bring up the Find (search) box
  9. Search for Invalid Tax Agency
  10. Write down the details of the error

Now you need to edit the damaged data by following these steps:

  1. Within QuickBooks (desktop) click on the Lists menu on the top menu bar
  2. Select the Item list
  3. Locate the first damaged item that was listed in the QBWin.log
  4. Edit the item based upon the following options:
  • Check the Preferred Vendor for incorrect information, if you find the data is erroneous, remove the improper name and assign the correct name, then click OK
  • If there is no Preferred Vendor you need to add the correct Vendor name to the field and then click OK
  • If the Preferred Vendor is correct, add or remove a character from the actual Item name to change the Item, then click OK.  After the item is saved, edit the item again to reverse the change you just made (re-add the removed character, or remove the added character), then click OK.

You will need to repeat these procedures for every item displaying the error in the QBWin.log file.

In most cases these steps will resolve this form of data damage; after making all the necessary manual repairs, run another Verify utility to insure that the issue(s) have been resolved.  If not, then consider using a professional file service to assist you, including but not limited to, Intuit Data Services.

With Avalara and their automated Avatax product you will avoid risky Sales and Use Tax errors that can result in an audit, negative tax finding, fine, penalty and interest.  They strive to provide you with the assurance of compliance without your needing to sacrifice productivity. And, if you simply can't wait till next week for another edition of Sales Tax Tuesday and you are wondering 'what all' is going on with Sales and User tax this year, check out Avalara's 2018 Sales Tax Changes guide.