The proper way to correct an invoice where some item(s) have an incorrect tax rate is to create a credit note WITH the item(s) that have the incorrect tax. Then create a new invoice with the corrected tax rate. The customer now has a credit balance for the tax amount under the new credit note.
- Open the invoice you want to adjust in Refund mode.
- Touch Credit/Return.
- Select the checkbox next to the specific item(s) that were purchased with an incorrect tax rate in the original invoice.
- Save the credit note to account.
- Create a new invoice and add the items you're adjusting.
- Use the Pencil --> Override Tax to change the tax rate to the correct values.
- Use the Allocate Credit button and select the taxed credit note that was just made to pay the tax-exempt invoice.
- The contact will now have a credit balance equal to the tax amount from the original taxed invoice.
The remaining balance can be refunded from the credit note or left on their account for future transactions.
A similar procedure can be used to Fix a Paid Taxable Invoice for a Tax Exempt Contact