Do I use a Debit memo or a Credit memo to remove sales tax from an invoice that has already been recorded?

Question:

The help section of my computer program talks about debit memos and credit memos, but is doesn't tell me which way to remove the sales tax from an invoice that the customer paid and also sent a tax exemption form so as not to pay the sales tax. This was done in June and that month is closed so I can't just correct the invoice. I use to open the month back up and adjust the invoice, but the CPA's in the last audit told me to stop doing that...but they didn't tell me how to fix the adjustment that needs to be made. The program talks about debit & credit memos, but I'm not sure which I should use. Can someone help? Please. Thanks.

at my work we use credit memo's when something is returned, debit memos are when people over pay something.

You need to issue a credit memo to the person who deducted the tax thus crediting them for that amount because of the exemption and clearing up your books. Whether or not you actually send it to them (don't know if that is necessary since they did not pay it - you could just mark it FOR RECORD PURPOSES ONLY), you need to justify the amount deducted from the account. This is the best way I know of for clearing it up.

For a sale, a debit memo is an invoice and a credit memo is for credits or removing something from sales. To remove the tax from the invoice, issue a credit memo.

Do I use a Debit memo or a Credit memo to remove sales tax from an invoice that has already been recorded?

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