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Calculate Sales Tax

As long as you enable tax calculation and select AvaTax Update as the tax calculation method in your accounting software, AvaTax Update automatically calculates a sales or use tax rate on a variety of transaction types according to the taxability rules of those products (exempt customers aren't charged sales tax). Some of the transaction types AvaTax Update calculates tax for are:

  • Estimates/quotes
  • Orders/invoices/cash sales
  • Return authorizations/credit memos/cash refunds

When you create one of these transaction types in your accounting software, AvaTax Update uses the customer's ship-to address to calculate the correct sales tax.

If you're applying discounts, remember:

  • A header-level discount is applied to all taxable items in the transaction
  • A line-level discount is applied to the item above the discount row
  • If both a header-level and a line-level discount are applied, their cumulative discount is applied to the line item

Optional fields when calculating sales tax

Use these optional fields in the Sales Transaction Entry dialog box in Microsoft Dynamics GP to customize how AvaTax Update calculates taxes.

  • Customer PO Number: On invoices and returns, enter a number here to trigger single-use exemption certificates you've configured.

  • Trade Discount: AvaTax Update allocates this discount to each line item in tax calculations.

  • Freight: AvaTax Update associates this item with the tax code/shipping code or default tax code you set in the AvaTax Configuration dialog box.

  • Miscellaneous: AvaTax Update recognizes this as a line item and can apply tax codes to it.

Calculate sales tax using a tax override

Manually change the tax amount on a specific transaction with a tax override by either changing the transaction date or the transaction tax amount. The tax date override feature is available only for credit memo and return orders.

To override tax calculation:

  1. Prepare by ensuring the following:
    1. The Tax Amount Adjustment functionality via Receivables Transaction Entry option is enabled in configuration
    2. The Allow Tax adjustment option in the Additional > AvaTax RM Override > Avalara AvaTax Override Line Details is enabled
  2. Go to Transactions > Sales, and click Transaction Entry.
  3. Select the transaction for which you want to override the sales tax calculation. The Receivables Transaction Entry window opens.
  4. To override tax by changing the transaction date:
    1. Go to Additional > AvaTax RM Override.
    2. In the Avalara AvaTax Override Line Details window, type the date to use for the transaction, and then click Save.
  5. To override tax by changing the transaction tax amount:
    1. Click the arrow next to Tax.
    2. In the Receivable Tax Entry window, in Tax Percent / Amount, type a value other than the value that was previously calculated, and then click Save

Recalculate multiple sales orders or AR records at once

To recalculate sales tax on multiple sales orders and accounts receivable records at once:

  1. Go to Tools > Utilities > Avalara AvaTax > Update, and then click SOP Tax Update Utility.
  2. Next to Document Type, select SOP (for sales order processing) or AR (for accounts receivable).
  3. Next to Batch ID From and Batch ID To, click the Search icon, select a range of batch IDs to update, and then click Select.
  4. To limit recalculation only to batches in your selection with select document dates, next to Document Date From and Document Date To, click the Calendar icon and select a date range.
  5. Under Transaction Type, select the types of transactions to update in the batches, click Update, and then click Yes.
  6. In the Report Destination dialog box, under Report Type, select Screen, and then click OK.
  7. In the Results report, review the records to make sure they're the ones you wanted to update.
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