Accounting: sales tax discounts

[Luke <..hidden..>]

For payment of sales taxes, I usually do a transfer involving checking, 
and the sales tax liability accounts.

Company is liable for sales tax in a state which permits a 1% discount for 
on-time/early payment.

Therefore, there is a difference between amount collected, and amount 
paid.

What are good practices for handling this?

I'm no accountant, but the two ways which came to mind for me were:

1.  Add an income account called "discounts received" or similar, and make 
it a part of the transfer.  Credit checking for the amounts actually paid 
to the state, and debit the tax liability accounts.  Debit the tax 
liabilities for the discount, and credit to an income account (E.G. 
Discounts Received).

2.  End of year version: do a bulk transfer of all extra funds in the 
sales tax liability accounts, into some income account, as a retainable 
earning.
Easier, but leaves those accounts un-reconcilable during the year.

Am I on the right track here?

Regards,

Luke