SOLUTION: To ensure everything flows smoothly and accurately be sure to execute all three steps.

If you wont, write a reminder to yourself to change this on the date the sales tax rate is effective.

Double click the old Sales Tax item and click the box Item is Inactive.

If I was audited and the tax rates had no trail, I could be held liable.

Heres the proof: I ran an experiment, which you can easily replicate.

I ran the Sales Tax Liability Report and the Balance Sheet as of today and wrote down the amount of the sales tax liability.

In my case they were the same amount because we report sales tax on accrual basis in California, and my balance sheet was accrual basis as well.

It correctly picked up the new sales tax receipt of 8.5.

When I hit my previous button to look at the prior sales tax receipt, I could see that the older receipt still correclty shows 9.5.

Bottom line: Changing the rate on the existing item does NOTHING to old transactions or reports.

And adjusting the item is easier than setting up a new item because you do not need to change all the default sales tax items for each customer.

How To Adjust Sales Tax In Quickbooks For Mac