Payment of Back Sales Tax

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The interest paid is an expense. The taxes paid is also an expense on the assumption that the sales of goods and services was recorded as income.

I would create a special account for the surcharges collected, separate from the regular dues and separate from any other income from your exempt activities function.

The Board should decide what to do about any excess surcharges collected, and what they decide will determine how to account for it.

All you need to do is account for it so that the board members can understand it when you print reports. I'm in the same position as you in a 501c3. If it were me I would set up an Income account in Quickbooks (I saw your post there also) for the surcharges and an expense account for the taxes and interest. Then some time in the future when you don't use those accounts you can mark them as "Inactive".

Just curious - what was the taxable service? I sometimes have to pay sales tax on product (printed materials) but we don't have any taxable service.

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Thanks to those who responded. The service is sailboat mooring (dock space). That service and others, as well as club initiation fees, dues, and sales of club stock are subject to sales tax in Wisconsin.

We now pay state, county and city sales taxes on all of our income.