Sales tax is NOT an expense and you can't write it off. When you collect Sales Tax, report it as a liability. When paid, you relieve or zero out the liability. You are not "out" any cash, so therefore it isn't an expense. I could go deeper on my answer, but that would only be relevant if you collected too much or not enough. Personally, in these latter examples, I would maintain those balances in the liability account for possible offset in future months. If it is appropriate to "write-off" the overage or under collection, only THEN would you report either an expense or income. You only record tax in the Tax and Licenses category if the tax is a cost to the business. An example would be income tax. And while I wouldn't recommend it, you could break out your utility bills and record the tax expense in the tax category, The key is to report consistently so you are able to comparing your expenses from year to year and/or to similar businesses.
