Question
Is there a setting in QBO that prevents the AST engine from adding a duplicate "Tax on Shipping" line to PayPal-imported transactions?I am using QuickBooks Online.
I am the Treasurer of a Tennessee nonprofit organization using QuickBooks Online with the PayPal Connector by QuickBooks app.
I am writing to report a problem with how the PayPal Connector handles sales tax on shipping charges for Tennessee transactions, and to request guidance on a correction path that does not currently appear to exist.
THE PROBLEM
Tennessee law requires sales tax on shipping charges. PayPal calculates and collects the correct Tennessee sales tax on shipping at the time of each transaction. When those transactions are imported into QBO via the PayPal Connector, QBO's Automated Sales Tax (AST) engine adds an additional "Tax on Shipping" split line on top of the tax PayPal already calculated. The result is that sales tax on shipping is recorded twice.
This creates two problems:
1. The Sales Tax Liability report overstates the amount due to the Tennessee Department of Revenue.
2. The Sales Tax Payable account balance on the balance sheet is overstated by the same amount.
WHAT I HAVE TRIED
I have investigated the following correction paths and found each to be unavailable:
1. Editing the transaction in the Banking feed For Review tab — the sales tax fields are not editable in that view.
2. Editing the transaction after acceptance — once confirmed, the tax lines are locked and cannot be edited in either the register or the full transaction form.
3. Disabling automatic sales tax on shipping in QBO settings — I cannot locate a specific setting that controls this for PayPal-imported transactions without affecting other transaction types.
4. Mapping shipping to a non-taxable item in the PayPal Connector — the Connector maps shipping to a "Shipping and Handling" service item, but there is no taxability checkbox available in the Connector settings, and the item itself does not expose a tax control that resolves the problem.
CURRENT WORKAROUND
I am currently correcting each affected period using the Sales Tax Center Adjust function, combined with a manual journal entry to reconcile the balance sheet. While functional, this is a manual correction required every month and does not address the root cause.
MY QUESTIONS
1. Is there a setting in QBO or the PayPal Connector that prevents the AST engine from adding a duplicate "Tax on Shipping" line to PayPal-imported transactions?
2. If not, is this a known issue, and is a fix planned?
3. Is there a supported way to edit or remove the duplicate line from an already-accepted transaction?
I am using QuickBooks Online with the PayPal Connector by QuickBooks app. Please advise.
Thank you.