The tax treatment for returned items depends on the return date vis-à-vis the purchase date.
If an item is purchased and then returned within the same month, the transaction offsets itself. However, if an item is purchased and then returned in a future month, the value of the items sold (along with any shipping charges) is applied to the month in which the original sale occurred – while the returned sales tax is applied in the current month, thereby creating a tax credit in the same jurisdictions in which the tax had been paid.
Your shopping cart or order management system should allow you to handle merchandise returns and other adjustments to existing orders through your cart admin panel. Once you create a return or partial return, your cart communicates with TaxCloud and TaxCloud credits your account for the sales tax originally paid on the returned or refunded amount.
You can view the details of a return on your “Transactions” page, where it will appear within the original order.