You have to set up your sales tax SCHEDULES separately to be able to track it properly OR use AVATAX.

In Washington State we have a state level sales tax of 6.5% and then local municipalities have their own add on rates which sounds like what you do.

Set up sales tax CODES for the state level and each municipality.

For example:   

WA   = 6.5%

SEATTLE = 3.0%

SPOKANE = 2.9%

Then set up sales tax SCHEDULES and identify which pieces are added together to get the total sales tax rate.

Schedule SEATTLE

WA

SEATTLE

Schedule SPOKANE

WA

SPOKANE

When the sales tax reports printout you will get a breakdown of each jurisdiction.

Hi Tom:

Thank you for taking time to answer.

I was able to set up the tax entities and their rates up & then set the tax districts of combined state/city and county tax as per the instructions so the total sales tax rate shows correctly on our a/r invoices. That works fine. So for Example: We charge 5.785% for City of Fountain Hills in state of AZ

Arizona state/county tax is: 4.09%

FH City Tax:                         1.69%

We pay State/City/County tax to one municipality which is   AZ DOR and they distribute the tax to the city & county. However, I need a report that breaks out what is owed to the  city  and what is owed to the state as that is how we have to report it so they know how much to distribute  those entities. I cannot find a report that does this.  Quick books has a report that does. As simple as Quick books  is it makes this reporting easy.  So my question is two-fold. Are you saying I still need to set up schedules? And do you issue a check for the municipalities through a/p as you would do to pay any vendor? 

The A/R sales tax report will show the different jurisdiction once you set up the tax schedules as per above..   I do it all the time.

Note that there is a difference between tax codes and tax schedules.  Tax codes are the individual jurisdiction's rates.  The schedule combines the tax codes into the combined rates.