Between the 5th and 10th of each month, review, reconcile, and approve your scheduled returns for a state and month. Once approved, the record for a state is locked for that month and Avalara can begin the generation of tax returns.
For more information, learn how to schedule or edit returns.
Monthly returns cycle
Review tax liabilities
- Go to Returns > This Month's Return Filing to review tax liabilities for your company.
- Click the Details button next to a jurisdiction to see the form name or number for each return in this jurisdiction, the frequency that each form is filed, the total sales and taxable sales activity for the month, the amount of tax calculated, and the amount of sales tax that has accrued for the filing period and is now due to be remitted to the jurisdiction.
- This page only shows returns that are being filed for the current month. Quarterly, semi-annual, annual, etc returns only appear here on the months when they must be filed and paid; during interim months, click Returns Accruing For a Future Filing Period to see these longer-term returns.
- Click Summary next to a specific return on the jurisdiction page to see more information about that return. The Tax Due Avalara section lists the total amount to be remitted to Avalara at filing, and the Remittance to Tax Authority section describes the total amount remitted to the jurisdiction by Avalara. If you file quarterly, "accrual" amounts display during interim months instead of remittance in both of these sections.
Remittance to Tax Authority includes vendor discounts for the current filing period, while Tax Due Avalara includes vendor discounts accrued for the previous period.
Reconcile tax liabilities
Reconcile your scheduled tax returns against your transactions. Reconciling accomplishes two important goals: identifying differences between your returns and the transactions in AvaTax Update, and catching discrepancies between your accounting system and AvaTax Update.
Reconciling should be done between the 1st and 10th of each month following the close of last month's filing period. For example, you would reconcile May's returns between June 1st and June 10th. Reconciling should only be done once all your transactions and changes are added to AvaTax Update. To reconcile your tax labilities:
- Run a liability worksheet summary report and a sales and use tax summary report, and save both as spreadsheets.
- Format the data
- Identify any differences
Bring the data together
The sales and sellers use tax summary report shows the total sales and tax for all the transactions in the selected date range. The liability worksheet state summary report shows a summary of your tax liability for the same period. With both reports summarized by state, use the vlookup function in Excel to compare the Amount Due column on your liability worksheet summary report to Tax Amount column on your sales and use tax summary report, and determine if your scheduled returns were calculated correctly. To do this you will need Microsoft Excel and some basic Excel skills, such as vlookup and text-to-columns.
Before you compare the reports, you need to format both State columns the same way. Notice the difference in the State columns in the image below. The liability worksheet summary report inserts "US" after each state, while the sales and use tax summary report doesn't.
- Use Text to Columns to separate the US declaration from the state abbreviation. If you don't know how to use text to columns, Microsoft's help content can walk you through the process.
- Use the State column and Vlookup to compare columns between the reports. In this case, check the worksheet report's Amount Due against the Tax Amount from the sales and use tax summary report. In this example, we've put our vlookup results from the sales and use tax summary report in column J of the liability worksheet summary report, and labeled them Report. If you don't know how to use vlookup, Microsoft's help content can walk you through the process.
Find differences between the liability worksheet report and the sales and use tax summary report by subtracting the Total Tax field on the sales and use tax summary report from the Amount Due on the liability worksheet report. Once found, check your scheduled returns for vendor discounts, carryover credits, or missing registration information as likely causes of discrepancies.
Subtract the Report field created in the previous section from the Amount Due column. Any number other than zero in the result indicates a discrepancy that you should investigate. In the example image below we've added a Reason column to the spreadsheet to record why each discrepancy has occurred, and we suggest you do the same.
There are several steps you can take to investigate discrepancies in your reports.
- Make sure you've set up a return in that jurisdiction: Liability collected in states (or local jurisdictions) where you haven't registered to file is 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. Consequently, 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: The reports in the example above were for one month. Any return that is filed, quarterly, semi-annually, annually, etc, will have additional sales tax not captured in the monthly report. Typically the numbers in your Returns data will be greater than the reports in this scenario. On your Schedule and Approve Returns page, click Details next to a state to view more information, including the filing frequency of returns in that state. If you suspect quarterly filing might be the cause of a discrepancy, you'll need to run the sales and use tax summary report for the entire quarter rather than a single month.
- 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. If you see discrepancies between your reports and your returns in Returns, check for discounts and credits.
Adjust tax liabilities
Manage your company's tax liability adjustments due to prior tax payments, tax prepayments, vendor discounts, and other adjustments through Returns.
- Go to Returns > This Month's Return Filing, and click Details next to the region where you want to adjust tax liabilities.
- Next to the return that you want to adjust, click Summary.
- 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 tax liabilities, approve your scheduled returns for a state and month. Once approved, the record for a state is locked for that month and Avalara can begin the generation of tax returns for that state and month. If you don't approve your returns, Avalara approves them automatically on your behalf after the 10th of the month.
To approve your returns, go to Returns > This Month's Return Fling and click Approve next to the regions where you want to approve returns. Alternatively, click Approve All Returns to easily approve every return that you've set up.