About Applying Payments to Taxes

Taxes applied to AR invoices are automatically paid when applying payments to the invoices.

If you applied taxes to AR invoices, the system applies payment to the tax amount first, then to the invoice total. If the payment does not sufficiently cover the total invoice balance, the tax is still paid first, with the remainder of the payment applied to the invoice total. If you want the entire payment applied to the invoice total, you will need to override the applied tax amount manually.

Note: If you are using the Distribute Tax to Retainage feature (AR Company Parameters), the Apply Tax amount does not include retainage tax. If payment has been applied to retainage tax, that amount will show in the Apply Retg Tax field (displayed only if you have the Include Apply RetgTax in Grid option checked, Options menu).