Here's an example of a posted Invoice where sales tax was charged. For the purposes of these instructions, let's assume the customer is tax-exempt and should have been charged $0.00 tax on this order.

Navigate to General Ledger -> GL Transaction View, cross-reference to the Sales Order screen and look at the G/L Transactions for this order.

Here you can see there is a CREDIT to the Sales Tax Payable liability account for $0.87 (i.e. the amount that was charged on the order). This increases the sales tax liability.

1. To adjust the tax, you'll start by creating a new Receipt and entering the info in the header, as usual.
2. Next, enter the amount to be applied to the Invoice in the Applied column. This will be the amount the customer is actually paying for the order.
   • In the example below, I've entered $14.44 because that is the invoice total minus sales tax.
3. Finally, enter the amount of the tax to be adjusted in the Tax Adj column. This will be the amount you want to reduce the invoice tax amount by. If you're writing off the tax entirely, then you'll enter the entire amount of the tax here.
   • In the example below, I've entered $0.87 because I want to adjust the entire tax amount off of the receivable.

After you post the Receipt, take another look at the GL Transaction View. The example below combines the transactions from the original invoice plus the receipt (click Add to and then cross-reference from the Receipt window).

Here you can see there is an offsetting DEBIT to the Sales Tax Payable liability account for $0.87 -- this decreases the sales tax liability.

Since we first credited the sales tax account and then debited it for the same amount, this reduces the sales tax liability for this invoice to $0.00.