diff --git a/app/DataMapper/TaxReport/TaxSummary.php b/app/DataMapper/TaxReport/TaxSummary.php
index f8a360e96a..e73678057c 100644
--- a/app/DataMapper/TaxReport/TaxSummary.php
+++ b/app/DataMapper/TaxReport/TaxSummary.php
@@ -20,12 +20,13 @@ class TaxSummary
     public float $total_taxes; // Tax collected and confirmed (ie. Invoice Paid)
     public float $total_paid; // Tax pending collection (Outstanding tax of balance owing)
     public string $status;
-
+    public float $adjustment;
     public function __construct(array $attributes = [])
     {
         $this->total_taxes = $attributes['total_taxes'] ?? 0.0;
         $this->total_paid = $attributes['total_paid'] ?? 0.0;
         $this->status = $attributes['status'] ?? 'updated';
+        $this->adjustment = $attributes['adjustment'] ?? 0.0;
     }
 
     public function toArray(): array
@@ -34,6 +35,7 @@ class TaxSummary
             'total_taxes' => $this->total_taxes,
             'total_paid' => $this->total_paid,
             'status' => $this->status,
+            'adjustment' => $this->adjustment,
         ];
     }
 }
diff --git a/app/Listeners/Invoice/InvoiceTransactionEventEntry.php b/app/Listeners/Invoice/InvoiceTransactionEventEntry.php
index 0a9f1a1f00..6580b047ef 100644
--- a/app/Listeners/Invoice/InvoiceTransactionEventEntry.php
+++ b/app/Listeners/Invoice/InvoiceTransactionEventEntry.php
@@ -67,6 +67,7 @@ class InvoiceTransactionEventEntry
             'event_id' => $invoice->is_deleted ? TransactionEvent::INVOICE_DELETED : TransactionEvent::INVOICE_UPDATED,
             'timestamp' => now()->timestamp,
             'metadata' => $this->getMetadata($invoice),
+            'period' => now()->endOfMonth()->format('Y-m-d'),
         ]);
     }
 
diff --git a/app/Listeners/Payment/PaymentTransactionEventEntry.php b/app/Listeners/Payment/PaymentTransactionEventEntry.php
new file mode 100644
index 0000000000..0e213f53d1
--- /dev/null
+++ b/app/Listeners/Payment/PaymentTransactionEventEntry.php
@@ -0,0 +1,234 @@
+<?php
+
+/**
+ * Invoice Ninja (https://invoiceninja.com).
+ *
+ * @link https://github.com/invoiceninja/invoiceninja source repository
+ *
+ * @copyright Copyright (c) 2025. Invoice Ninja LLC (https://invoiceninja.com)
+ *
+ * @license https://www.elastic.co/licensing/elastic-license
+ */
+
+namespace App\Listeners\Payment;
+
+use App\Models\Invoice;
+use App\Models\Activity;
+use App\Models\TransactionEvent;
+use Illuminate\Support\Collection;
+use App\DataMapper\TaxReport\TaxDetail;
+use App\DataMapper\TaxReport\TaxReport;
+use App\DataMapper\TaxReport\TaxSummary;
+use App\Repositories\ActivityRepository;
+use Illuminate\Contracts\Queue\ShouldQueue;
+use App\DataMapper\TransactionEventMetadata;
+use App\Libraries\MultiDB;
+use App\Models\Payment;
+use Illuminate\Queue\Middleware\WithoutOverlapping;
+use Illuminate\Bus\Queueable;
+use Illuminate\Queue\SerializesModels;
+use Illuminate\Queue\InteractsWithQueue;
+use Illuminate\Foundation\Bus\Dispatchable;
+use Carbon\Carbon;
+
+class PaymentTransactionEventEntry implements ShouldQueue
+{
+    use Dispatchable;
+    use InteractsWithQueue;
+    use Queueable;
+    use SerializesModels;
+
+    public $tries = 1;
+
+    private float $paid_ratio;
+
+    private Collection $payments;
+    /**
+     */
+    public function __construct(private Payment $payment, private array $invoice_ids, private string $db)
+    {}
+
+    public function handle()
+    {
+        nlog("PaymentTransactionEventEntry::handle");
+        //payment vs refunded
+        MultiDB::setDb($this->db);
+
+        $this->payments = $this->payment
+                            ->invoices()
+                            ->get()
+                            ->filter(function($invoice){
+                                //only insert adjustment entries if we are after the end of the month!!
+                                return Carbon::parse($invoice->date)->endOfMonth()->isBefore(now()->addSeconds($this->payment->company->timezone_offset()));
+                            })
+                            ->map(function ($invoice) {
+                                return [
+                                    'number' => $this->payment->number,
+                                    'amount' => $invoice->pivot->amount,
+                                    'refunded' => $invoice->pivot->refunded,
+                                    'date' => $invoice->pivot->created_at->format('Y-m-d'),
+                                ];
+                        });
+
+        Invoice::withTrashed()
+                ->whereIn('id', $this->invoice_ids)
+                ->get()
+                ->filter(function($invoice){
+                    //only insert adjustment entries if we are after the end of the month!!
+                    return Carbon::parse($invoice->date)->endOfMonth()->isBefore(now()->addSeconds($this->payment->company->timezone_offset()));
+                })
+                ->each(function($invoice){
+
+                $this->setPaidRatio($invoice);
+
+                TransactionEvent::create([
+                    'invoice_id' => $invoice->id,
+                    'client_id' => $invoice->client_id,
+                    'client_balance' => $invoice->client->balance,
+                    'client_paid_to_date' => $invoice->client->paid_to_date,
+                    'client_credit_balance' => $invoice->client->credit_balance,
+                    'invoice_balance' => $invoice->balance ?? 0,
+                    'invoice_amount' => $invoice->amount ?? 0  ,
+                    'invoice_partial' => $invoice->partial ?? 0,
+                    'invoice_paid_to_date' => $invoice->paid_to_date ?? 0,
+                    'invoice_status' => $invoice->is_deleted ? 7 : $invoice->status_id,
+                    'event_id' => $this->payment->is_deleted ? TransactionEvent::PAYMENT_DELETED : TransactionEvent::PAYMENT_REFUNDED,
+                    'timestamp' => now()->timestamp,
+                    'metadata' => $this->getMetadata($invoice),
+                    'period' => now()->endOfMonth()->format('Y-m-d'),
+                    'payment_id' => $this->payment->id,
+                    'payment_amount' => $this->payment->amount,
+                    'payment_refunded' => $this->payment->refunded,
+                    'payment_applied' => $this->payment->applied,
+                    'payment_status' => $this->payment->status_id,
+                ]);
+        });
+    }
+
+    private function setPaidRatio(Invoice $invoice): self
+    {
+        if ($invoice->amount == 0) {
+            $this->paid_ratio = 0;
+            return $this;
+        }
+
+        $this->paid_ratio = $invoice->paid_to_date / $invoice->amount;
+
+        return $this;
+    }
+
+    private function calculateRatio(float $amount): float
+    {
+        return round($amount * $this->paid_ratio, 2);
+    }
+
+    /**
+     * Existing tax details are not deleted, but pending taxes are set to 0
+     *
+     * @param  mixed $invoice
+     */
+    private function getRefundedMetaData($invoice)
+    {
+
+        $calc = $invoice->calc();
+
+        $details = [];
+
+        $taxes = array_merge($calc->getTaxMap()->merge($calc->getTotalTaxMap())->toArray());
+
+        foreach ($taxes as $tax) {
+            $tax_detail = [
+                'tax_name' => $tax['name'],
+                'tax_rate' => $tax['tax_rate'],
+                'taxable_amount' => $tax['base_amount'] ?? $calc->getNetSubtotal(),
+                'tax_amount' => $tax['total'],
+                'tax_amount_paid' => $this->calculateRatio($tax['total']),
+                'tax_amount_remaining' => round($tax['total'] - $this->calculateRatio($tax['total']), 2),
+            ];
+            $details[] = $tax_detail;
+        }
+
+        return new TransactionEventMetadata([
+            'tax_report' => [
+                'tax_details' => $details,
+                'payment_history' => $this->payments->toArray(),
+                'tax_summary' => [
+                    'total_taxes' => $invoice->total_taxes,
+                    'total_paid' => $this->getTotalTaxPaid($invoice),
+                    'adjustment' => round($invoice->total_taxes - $this->getTotalTaxPaid($invoice), 2) * -1,
+                    'status' => 'adjustment',
+                ],
+            ],
+        ]);
+
+    }
+
+    /**
+     * Set all tax details to 0
+     *
+     * @param  mixed $invoice
+     */
+    private function getDeletedMetaData($invoice)
+    {
+
+        $calc = $invoice->calc();
+
+        $details = [];
+
+        $taxes = array_merge($calc->getTaxMap()->merge($calc->getTotalTaxMap())->toArray());
+
+        foreach ($taxes as $tax) {
+            $tax_detail = [
+                'tax_name' => $tax['name'],
+                'tax_rate' => $tax['tax_rate'],
+                'taxable_amount' => $tax['base_amount'] ?? $calc->getNetSubtotal(),
+                'tax_amount' => $tax['total'],
+                'tax_amount_paid' => $this->calculateRatio($tax['total']),
+                'tax_amount_remaining' => 0,
+            ];
+            $details[] = $tax_detail;
+        }
+
+        return new TransactionEventMetadata([
+            'tax_report' => [
+                'tax_details' => $details,
+                'payment_history' => $this->payments->toArray(),
+                'tax_summary' => [
+                    'total_taxes' => $invoice->total_taxes,
+                    'total_paid' => $this->getTotalTaxPaid($invoice),
+                    'adjustment' => round($invoice->total_taxes - $this->getTotalTaxPaid($invoice), 2) * -1,
+                    'status' => 'adjustment',
+                ],
+            ],
+        ]);
+
+    }
+
+    private function getMetadata($invoice)
+    {
+
+        if ($this->payment->is_deleted) {
+            return $this->getDeletedMetaData($invoice);
+        } else {
+            return $this->getRefundedMetaData($invoice);
+        }
+
+    }
+
+    private function getTotalTaxPaid($invoice)
+    {
+        if ($invoice->amount == 0) {
+            return 0;
+        }
+
+        $total_paid = $this->payments->sum('amount') - $this->payments->sum('refunded');
+
+        return round($invoice->total_taxes * ($total_paid / $invoice->amount), 2);
+
+    }
+
+    public function middleware()
+    {
+        return [(new WithoutOverlapping("payment_transaction_event_entry_".$this->payment->id.'_'.$this->db))->releaseAfter(10)->expireAfter(30)];
+    }
+}
diff --git a/app/Models/TransactionEvent.php b/app/Models/TransactionEvent.php
index cccf52e904..38ff4aafaa 100644
--- a/app/Models/TransactionEvent.php
+++ b/app/Models/TransactionEvent.php
@@ -42,6 +42,7 @@ use App\DataMapper\TransactionEventMetadata;
  * @property string $credit_balance
  * @property string $credit_amount
  * @property int|null $credit_status
+ * @property Carbon|null $period
  * @method static \Illuminate\Database\Eloquent\Builder|StaticModel company()
  * @method static \Illuminate\Database\Eloquent\Builder|StaticModel exclude($columns)
  * @mixin \Eloquent
@@ -56,11 +57,12 @@ class TransactionEvent extends StaticModel
         'metadata' => TransactionEventMetadata::class,
         'payment_request' => 'array',
         'paymentables' => 'array',
+        'period' => 'date',
     ];
 
     public const INVOICE_UPDATED = 1;
 
-    public const INVOICE_DELETED = 2;
+    public const PAYMENT_REFUNDED = 2;
 
     public const PAYMENT_DELETED = 3;
 }
diff --git a/app/Services/Payment/DeletePayment.php b/app/Services/Payment/DeletePayment.php
index df679a8bf3..907c0e9edc 100644
--- a/app/Services/Payment/DeletePayment.php
+++ b/app/Services/Payment/DeletePayment.php
@@ -12,10 +12,11 @@
 
 namespace App\Services\Payment;
 
-use App\Models\BankTransaction;
 use App\Models\Credit;
 use App\Models\Invoice;
 use App\Models\Payment;
+use App\Models\BankTransaction;
+use App\Listeners\Payment\PaymentTransactionEventEntry;
 use Illuminate\Contracts\Container\BindingResolutionException;
 
 class DeletePayment
@@ -87,6 +88,9 @@ class DeletePayment
         $this->_paid_to_date_deleted = 0;
 
         if ($this->payment->invoices()->exists()) {
+        
+            $invoice_ids = $this->payment->invoices()->pluck('id');
+
             $this->payment->invoices()->each(function ($paymentable_invoice) {
                 $net_deletable = $paymentable_invoice->pivot->amount - $paymentable_invoice->pivot->refunded;
 
@@ -159,6 +163,8 @@ class DeletePayment
                 
 
             });
+
+            PaymentTransactionEventEntry::dispatch($this->payment, $invoice_ids, $this->payment->company->db);
         }
 
         //sometimes the payment is NOT created properly, this catches the payment and prevents the paid to date reducing inappropriately.
diff --git a/app/Services/Payment/RefundPayment.php b/app/Services/Payment/RefundPayment.php
index 701ed5f79b..2f0e54cead 100644
--- a/app/Services/Payment/RefundPayment.php
+++ b/app/Services/Payment/RefundPayment.php
@@ -12,15 +12,16 @@
 
 namespace App\Services\Payment;
 
-use App\Exceptions\PaymentRefundFailed;
-use App\Jobs\Payment\EmailRefundPayment;
-use App\Models\Activity;
+use stdClass;
+use App\Utils\Ninja;
 use App\Models\Credit;
 use App\Models\Invoice;
 use App\Models\Payment;
+use App\Models\Activity;
+use App\Exceptions\PaymentRefundFailed;
+use App\Jobs\Payment\EmailRefundPayment;
 use App\Repositories\ActivityRepository;
-use App\Utils\Ninja;
-use stdClass;
+use App\Listeners\Payment\PaymentTransactionEventEntry;
 
 class RefundPayment
 {
@@ -312,6 +313,8 @@ class RefundPayment
 
             }
 
+            PaymentTransactionEventEntry::dispatch($this->payment, array_column($this->refund_data['invoices'], 'invoice_id'), $this->payment->company->db);
+
         } else {
             //if we are refunding and no payments have been tagged, then we need to decrement the client->paid_to_date by the total refund amount.
 
diff --git a/app/Services/Report/XLS/TaxReport.php b/app/Services/Report/XLS/TaxReport.php
index 0e58d0aef7..958345516f 100644
--- a/app/Services/Report/XLS/TaxReport.php
+++ b/app/Services/Report/XLS/TaxReport.php
@@ -11,6 +11,7 @@ use App\Services\Report\TaxSummaryReport;
 use Illuminate\Database\Eloquent\Builder;
 use PhpOffice\PhpSpreadsheet\Spreadsheet;
 use App\Models\Invoice;
+use App\Listeners\Invoice\InvoiceTransactionEventEntry;
 
 class TaxReport
 {
@@ -189,53 +190,16 @@ class TaxReport
         /** @var Invoice $invoice */
         foreach($this->query->cursor() as $invoice){
 
-            $calc = $invoice->calc();
-            //Combine the line taxes with invoice taxes here to get a total tax amount
-            $taxes = array_merge($calc->getTaxMap()->merge($calc->getTotalTaxMap())->toArray());
-            
-            $payment_amount = 0;
-
-            foreach ($invoice->payments()->get() as $payment) {
-
-                if($payment->pivot->created_at->addSeconds($offset)->isBetween($start_date_instance,$end_date_instance)){
-                    $payment_amount += ($payment->pivot->amount - $payment->pivot->refunded);
-                }
+            if($invoice->transaction_events->count() == 0){
+                (new InvoiceTransactionEventEntry())->run($invoice);
             }
 
-            $payment_amount = round($payment_amount,2);
-            $invoice_amount = round($invoice->amount,2);
-            
-            $total_taxes = round($invoice->total_taxes,2);
+            //get the invoice state as at the end of the current period.
+            $invoice->transaction_events->each(function($event){
 
-            $pro_rata_payment_ratio = $payment_amount != 0 ? ($payment_amount/$invoice_amount) : 0;
-            $total_taxes = $payment_amount != 0 ? ($payment_amount/$invoice_amount) * $invoice->total_taxes : 0;
-            $taxable_amount = $calc->getNetSubtotal();
+            });
 
-                $this->data['invoices'][] = [
-                    $invoice->number,
-                    $invoice->date,
-                    $invoice_amount,
-                    $payment_amount,
-                    $total_taxes,
-                    $taxable_amount,
-                ];
-
-
-            foreach($taxes as $tax){
-
-                $this->data['invoice_items'][] = [
-                    $invoice->number,
-                    $invoice->date,
-                    $invoice_amount,
-                    $payment_amount,
-                    $tax['name'],
-                    $tax['tax_rate'],
-                    $tax['total'],
-                    $tax['total'] * $pro_rata_payment_ratio,
-                    $tax['base_amount'] ?? $calc->getNetSubtotal(),
-                    $tax['nexus'] ?? '',
-                ];
-            }
+            //anything period the reporting period is considered an ADJUSTMENT 
 
         }
 
diff --git a/database/migrations/2025_08_05_023807_add_date_period_to_transaction_events_table.php b/database/migrations/2025_08_05_023807_add_date_period_to_transaction_events_table.php
new file mode 100644
index 0000000000..bf79aec457
--- /dev/null
+++ b/database/migrations/2025_08_05_023807_add_date_period_to_transaction_events_table.php
@@ -0,0 +1,25 @@
+<?php
+
+use Illuminate\Database\Migrations\Migration;
+use Illuminate\Database\Schema\Blueprint;
+use Illuminate\Support\Facades\Schema;
+
+return new class extends Migration
+{
+    /**
+     * Run the migrations.
+     */
+    public function up(): void
+    {
+        Schema::table('transaction_events', function (Blueprint $table) {
+            $table->date('period')->nullable();
+        });
+    }
+
+    /**
+     * Reverse the migrations.
+     */
+    public function down(): void
+    {
+    }
+};