I accidentally charged sales tax to a tax exempt client. I realized this as I was preparing to pay sales tax to the state.
What's the correct procedure here? Do I simply send the accidentally collected money back to the client and (for all practical purposes) pretend it never happened? Or is this something I should report as overcollected sales tax?
Both me and my client are located in New York State.
If they have a document that says they paid sales tax, then you must have a document that says you refunded it. Otherwise, your tax office might find out that you charged sales tax, you have no proof of the refund, so it very much looks like tax evasion. I'd call your tax office to hear what they say about it.
Yes -- you can refund the sales tax and adjust your return. Make sure you have a copy of your customer's reseller permit on file.
If the item sold was for their own use (instead of resale), then sales tax is due, so you might want to check with the customer and ask them what they want to do.
