How would you adjust tax rates when a jurisdiction changes its sales tax rate?

• A. Update the tax rate in Taxes settings, reclassify affected transactions if needed, and re-run tax liability reports.
• B. Change the tax rate on all invoices manually only.
• C. Remove tax from every transaction.
• D. Create a new tax code and leave the old one active.

Answer: (A)

When a jurisdiction changes its sales tax rate, you should update the rate in your tax settings, reclassify affected transactions if needed, and re-run tax liability reports. Updating the rate in the tax settings makes sure all new sales are calculated with the correct, current rate automatically. If some transactions were already recorded with the old rate, you may need to reclassify or adjust them so their tax amounts reflect the new rate, keeping your records accurate. Finally, running revised tax liability reports helps confirm that the amounts due to each taxing authority are correct for the periods affected and helps catch any discrepancies. The other approaches either rely on manual edits on many invoices, which is error-prone and not scalable; remove tax from every transaction, which would undercharge and violate tax rules; or create a new tax code while leaving the old one active, which can lead to confusion and reporting mistakes. Updating the existing tax rate, adjusting affected transactions, and validating with liability reports is the most reliable path.