Removing tax from existing credit memo

To remove tax from a credit, you can offset the tax amount by creating a separate invoice and applying it against the original invoice. This process ensures the tax is reversed correctly without altering the original transaction. By applying a zero-dollar payment between the two invoices, the tax portion is effectively cleared from the customer’s balance. This results in an updated invoice showing a reduced open amount.

• Create A New Invoice for the Customer using the Exact Tax Amount and assign it to the Sales Tax Payable Account.
• Publish The Invoice so it appears in Accounts Receivable alongside the original transaction.
• Select Both Invoices and choose Receive Payment to begin offsetting the balances.
• Enter Zero As The Payment Amount so the system applies the Tax Invoice against the Original Invoice automatically.
• Confirm The Transaction to Reduce the Open Balance and reflect the Removal of the Tax Amount on the Original Invoice.