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Run a Federal Excise Tax Summary Report

This article applies to:Avalara AvaTax

You must identify the AvaTax System tax codesHoverTT.png or custom tax codes for which the federal medical device excise tax (MDET) should be applied for the companyHoverTT.png. Custom tax rules are then imported to identify the excise tax rate for the appropriate entity use codeHoverTT.png and tax codeHoverTT.png combinations.

To run a report, follow the steps below in Generate any report and then customize your report based on the requirements described in the the section that follows -- Generate Federal Excise Tax Summary Report.

You can generate reports at any time. However, transaction history is available for reporting 1 hour after a document is committed in AvaTax. For more recent transaction activity, use the transactions list filter on the transactions tab. For more information about this and other report types and to learn how to run these reports, read our report descriptions. Learn how these reports are linked to one another or review the answers to our frequently asked questions about reports.

Background

The federal medical device excise tax (MDET) is part of the Health Care and Education Reconciliation Act of 2010. AvaTax allows you to calculate medical device excise taxes and generate a report to assist in filing the appropriate federal IRS tax forms.

In support of this, AvaTax includes two entity use codes and a report. The entity use codes, used in combination with a tax code, support the proper tax calculation.

You must identify the AvaTax System tax codes or custom tax codes for which the federal MDET should be applied for your company. Custom tax rules are then imported to identify the excise tax rate for the appropriate entity use code and tax code combinations.

Entity use codes

The entity use codes to support the MDET are:

  • MED1 - calculates excise tax only (exempt sales and seller's use tax)
  • MED2 - calculates excise tax in addition to sales and seller's use tax (taxable sales and seller's use)

These entity use codes are available when creating or adjusting a transactionHoverTT.png, calculating tax with the Basic or Advanced Tax Calculator, or importing tax rules.

SST Companies selling into SST states need to use entity use code MED2. Entity use code MED1 is not allowed because exemption certificatesHoverTT.png are required for SST transactions to exempt sales tax.

Calculate medical device excise tax (MDET) 

To calculate the MDET for your company's transactions, follow the steps below in AvaTax.

  1. Import a tax rule for the US with the Federal Medical Device Excise Tax Import template:
    1. TaxRuleTypeId = 0 (Column C)
    2. TaxTypeId = E ( Column M)
    3. RateTypeId = M (Column N)
    4. EntityUseCode = MED1 or MED2 (Column L)
    5. IsAllJuris = 0 (Column J)
    6. Value = The current MDET rate (for example, 0.023) (Column O)
      • A Tax Rule Import Template with an example tax rule for excise tax on a medical device is provided.
      • Tax rules for MDET may not be entered via the tax rules user interface in the Admin Console at this time.
  2. Create a new transaction or import transactions for medical devices.
    1. Enter a tax code and the entity use code MED1 or MED2. Entity use codes MED1 and MED2 can be selected in the AvaTax Admin Console when creating a transaction.
    2. When importing transactions, enter a TaxCode (Column I) and use EntityUseCode MED1 or MED2 (Column G).

Generate any report

To generate any type of report, follow these steps:

  1. On the Reports tab, select a report category. When making your selection, be aware that the first section is for sales tax reports and the second section is for consumer use tax reports.
  2. From the the Company or Separate Reporting Entity list, select a company or reporting entity.
    AvaTaxCalc-Reports-SelectCoorSRE.png
  3. From the Select Report list, select a report. Fields specific to the report you select display.
    AvaTaxCalc-Reports-SelectReport.png
  4. Type or select values in the fields that display to determine what's included in the report. Remember:
    • The HTML file format isn't  recommended for displaying large reports.
    • The EXCEL file format is limited to the number of rows Microsoft Excel supports.
    • Large reports take time to generate. Don't cancel the report.
  5. Click Generate.

Generate Federal Excise Tax Summary Report

Use this Summary Report to view your medical device excise tax summary liability by region. Generate the report by following the steps below.

  1. Next to Company, select the companyHoverTT.png from which to pull transactionsHoverTT.png for the report. If you select All, it uses transactions from all companies. You can also select one or more companies.
  2. Next to Select Date Range, select the range of dates for transactions to include in the report:
    • Current month (default)
    • Previous month
    • Other Range
  3. Next to File Format, select:
    • HTML (default)
    • EXCEL
    • PDF
  4. Click Generate.

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