Reconcile between the 1st and 10th of each month following the close of last month's filing period. For example, reconcile May's returns between June 1st and June 10th. Only reconcile after all transactions and changes for the current filing period are added to AvaTax Update, and remember that it takes thirty minutes for data from transactions to show up in reports.
Review and approve your scheduled returns between the 5th and 10th of each month. The record for a state is locked for that month once it's approved, and Avalara begins generating tax returns.
If you need to edit your scheduled returns, make sure that you make any changes before the last day of the month prior to the one in which the changes are going to occur. For example, if your filing frequency changes in April, update your returns by March 31st.
For more information, learn how to schedule or edit returns.
Review tax liabilities
- Go to Returns > Schedule and Approve Returns to review tax liabilities for your company.
- Click the Details button next to a jurisdiction to see the:
- Return form names or numbers
- Frequency each form is filed
- Total sales and taxable sales activity for the month
- The amount of tax calculated
- The amount of sales tax that has accrued for the filing period and is due to be remitted
- The details page shows returns that are being filed for the current month in the selected jurisdiction. Quarterly, semi-annual, and annual returns appear here during months when they are due. Click Returns Accruing For a Future Filing Period to see those longer-term returns during interim months.
- Click Summary next to a return on the jurisdiction page to see more information about that return. The Tax Due Avalara section lists the total amount you remit to Avalara, and the Remittance to Tax Authority section describes the total amount Avalara remits to the jurisdiction. In certain circumstances, these numbers might be different from each other. For example, if your return is eligible for an early filing vendor discount which doesn't end up being applied before funds are drawn from your account to pay your tax liabilities, Avalara carries that discount over to your next return. In general, the calculations for Remittance to Tax Authority include vendor discounts for the current filing period, while Tax Due Avalara includes discounts and credits carrying over from the previous period.
- "Accrual" amounts display instead of remittance during interim months if your company files quarterly, semi-annually, or annually.
Reconcile returns and your general ledger
Run the reports in your accounting software that work for the types of returns you're filing. If you need help with these reports, find instructions in your accounting software guide. Compare these reports with the Schedule and Approve Returns page in AvaTax Update under Returns > Schedule and Approve Returns. Your returns are reconciled with your accounting software transactions if the tax liability totals in AvaTax Update match the totals in your accounting software.
If the numbers don't match:
- Compare AvaTax Update reconciliation reports to your accounting software reports and reconcile any discrepancies.
- If a transaction in your accounting software isn't in AvaTax Update, import the missing sales tax or consumer use transaction, or void the transaction in your accounting software.
- Similarly, if a transaction in AvaTax Update isn't in your accounting software, add the transaction to your accounting software or void the transaction in AvaTax Update.
Reconcile returns and AvaTax Update transactions
Sometimes, the amount of tax being remitted on your scheduled returns might not match up with the amount of tax calculated from your transactions. This could be because of something benign, like vendor discounts and carryover credits, or it could be because of an issue that would cause an inaccurate filing, like a return form that's been set up incorrectly. Reconcile your scheduled returns with your transactions in AvaTax Update to identify any discrepancies and make sure your returns are accurate.
Reconcile by comparing a liability worksheet summary report and a sales and use tax summary report. The sales and sellers use tax summary report shows the total sales and tax for transactions in a selected date range, and the liability worksheet state summary report shows a summary of your tax liability for the same period. Between them, the numbers in the Amount Due column in your liability worksheet summary report should equal the numbers for each corresponding state in the Tax Amount column of the sales and use tax summary report. Any difference in these numbers indicates a discrepancy that you should look into.
If you find discrepancies between these reports:
- Make sure you've set up a return in the jurisdiction. Taxes collected in jurisdictions where you haven't registered to file are excluded from your returns - even if you've told AvaTax Update that you're collecting and remitting tax in that jurisdiction, and collected tax on those transactions. As such, the sales and use tax summary report may show a tax amount while your returns and the liability worksheet summary report show nothing due. Any calculated tax from a region where you haven't set up a return is sent into accrual and not reported until you schedule a return in that jurisdiction.
- Check the filing frequency. Any return that is filed quarterly, semi-annually, or annually will have additional sales tax not captured in the monthly report. If this is the cause of a discrepancy, Returns usually shows larger numbers than the reports do. If you suspect quarterly, semi-annual, or annual filing might be the cause of a discrepancy, you'll need to run the sales and use tax summary report for the entire filing period rather than a single month. Check the filing frequency for a return by going to the Schedule and Approve Returns page and clicking Details next to the relevant state.
- Look for vendor discounts and carryover credits. The sales and use tax summary report doesn't capture some elements of your returns, including vendor discounts and credits that may be excluded from one period and applied in another. Check for discounts and credits if there are discrepancies between transactions in AvaTax Update and Returns that can't be explained by filing frequency or a lack of scheduled returns.
Adjust tax liabilities
Manage your company's tax liability adjustments resulting from prior tax payments, tax prepayments, vendor discounts, and other adjustments through Returns.
- Go to Returns > Schedule and Approve Returns, and click Details next to the region where you want to adjust tax liabilities.
- Click Summary next to the return you want to adjust.
- Expand the Adjustments to Taxes and Fees and Adjustments to Remittance sections to view your tax liability adjustments. Click Edit Adjustments to Taxes and Fees to manually change your prior payment and prepayment numbers.
Approve the returns for a state
After reviewing and reconciling your company's tax liabilities, approve all scheduled returns. Once approved, the record for a state is locked for that month so Avalara can begin generating tax returns. Avalara approves your returns automatically on your behalf after the 10th of the month if you don't approve them manually.
To approve your returns, go to Returns > Schedule and Approve Returns and click Approve next to the regions where you want to approve returns. Alternatively, click Approve All Returns to approve every scheduled return.