In Adjust Receivables, [Adjust], the Taxable column in the distribution grid will prefill with the original distribution's Taxable field value. If no change is made to this field, it is accepted along with the adjustment entered. However, if there is a change made to the field, a validation is done. The process compares the value entered with the balance outstanding for the invoice. So, if a payment was made to the amount only and not to the taxes, you are not able to completely credit or write off the Taxable amount. You can only write off the balance amount.

You will receive the "The taxable amount cannot exceed the invoice amount" error at this time.

This is a known software issue that will be resolved in a future release.

Until this issue is resolved, to make an adjustment to the Taxable amount of an invoice, you will need to void it and reenter it in Accounts Receivable or Billing. You can still make an adjustment to an invoice with sales tax, but since you cannot modify the Taxable column, the Accounts Receivable Sales Tax Reports will be incorrect.