Use the following procedure to credit a customer that has been charged sales tax by mistake.
To reverse sales tax charged on an invoice

1 On the Sales Order Main menu, click Invoice Data Entry.

2 At the Invoice No. field, enter the invoice number.

3 At the Customer No. field, select the customer and verify that the tax schedule is the same as used on the original invoice.

4 On the Lines tab, enter the same item from the original invoice, but use a negative quantity and mark the item taxable. Enter a second line with the same item, positive quantity, and mark it non-taxable.

5 On the Totals tab, the amounts should be the same in both the Taxable and Non-Taxable fields. The sales tax and net invoice amount should be showing as a negative amount for the amount of the sales tax.

6 Print the invoice.

7 Print and update the Sales Journal and Daily Transaction Journal. This will credit Accounts Receivable and debit the sales tax payable account. The sales tax report will also be corrected.