Managing Sales Tax Discounts Some states offer a discount if you pay your sales tax before the due date. If you merely choose the Pay Sales Tax command (on the Sales Tax submenu of the Vendors menu), QuickBooks pays the entire amount collected (which has been posted to the Sales Tax Payable liability account). You've handed the state a gift. Manage your discounts within QuickBooks, so you can keep that discount amount for yourself. In order to reduce the sales tax collected by the discount amount, you must create an account to hold the discount. I use an Income account named Sales Tax Discounts Earned. When you fill out your sales tax coupon or form, calculate the discount amount. Then choose Vendors, Sales Tax, Adjust Sales Tax Due. In the Sales Tax Adjustment dialog, take the following steps: Select the Sales Tax Vendor Select the Adjustment Account (the account you created to hold the discount) Choose the Reduce Sales Tax option Enter the amount of the discount Click OK The data in the form is saved as a journal entry that debits the Sales Tax Payable liability account, and credits the income account you chose for this purpose. NOTE: If you pay multiple sales tax authorities, create a separate adjustment for each. To pay the sales tax, choose Vendors, Sales Tax, Pay Sales Tax. The Pay Sales Tax dialog displays the discount entries you created. Select the sales tax item(s) to pay. You're creating a check, so if you pay multiple sales tax authorities, select only the sales tax items for a single sales tax vendor. Then select the corresponding discount entry for this vendor. QuickBooks calculates the net amount. Click OK and either print or write the check.