A tax authority can require that the company must record sales taxes on prepayments from customers, although a sale has not been made. To set up sales tax on prepayments:
On the tab, select the check box. Sales tax is calculated and posted whenever a prepayment is posted.
In the field, enter a posting profile that defines the ledger account to which the sales tax transactions on prepayments are posted temporarily.
When you post a prepayment through a journal, select the check box.
If you omit this step, the sales tax is not posted correctly.
When a sales invoice is created and the prepayment is settled, an automatic transaction on the sales tax prepayments account offsets the first temporary sales tax transaction.