Skip to main content
Avalara Help Center

Manage the Liability Worksheet

This article applies to:Avalara Returns

After reviewing and reconciling your tax liabilities, approve the tax liabilities 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.

For more information, learn how to generate the liability worksheet and edit it's settings.

PLAY-BLUE-30px.png Liabilty worksheet recorded webinar

Report on tax liabilities

Three reports allow you to manage your liability worksheets in a spreadsheet application:

  • Liability Worksheet State Summary: Summarizes the selected liability worksheet with one row of data for each state or province.
  • Liability Worksheet Return Detail: Displays the tax return data of each state or province for the selected liability worksheet.
  • Liability Worksheet Carry-over Credits: Displays the details of all applied or excluded credits at the tax return level for the selected liability worksheet.
  1. On the Reports tab, click Liability Worksheet Exports.
    AvaTaxCalc-TaxReturns-ClickLiabilityWorksheetExports.png
  2. On the Reports screen, select a Separate Reporting Entity.

    AvaTaxCalc-TaxReturns-SelectLiabilityWorksheetSRE.png
  3. In Select Report, select a report.

    AvaTaxCalc-TaxReturns-SelectLiabilityWorksheetExportsReport.png
  4. Type or select values for the report fields.
  5. Click Generate.

Notes:

The EXCEL file format is limited to the number of rows Microsoft® Excel® supports.

Large reports take time to generate. Please do not cancel the report.

Review tax liabilities

Review tax liabilities for a separate reporting entity using the liability worksheetHoverTT.png.

  1. On the Tax Returns tab, select Liability Worksheet from the navigation bar.
    TaxReturns-tab.png
  2. Select a Separate Reporting Entity.

    AvaTaxCalc-TaxReturns-SelectLiabilityWorksheetSRE.png
  3. Filter the liability worksheet to display records for a specific month or group of states.
  4. Click the Expand button next to a State. The following fields display for each state:
     

    AvaTaxCalc-TaxReturns-ClickExpandforaState.png

    • Form: The jurisdiction assigned form name or number that Avalara files on behalf of its customer.

    • Filing Type: The type of filing for the form.

    • Month Sales: The total sales activity for the selected month

    • Month Taxable: The total taxable sales activity for the selected month

    • Month Tax Liability: The total sales tax invoiced for the selected month

    • Period Liability: The current sales tax accrued for the filing period. For example, a form filed on a quarterly basis, but in the second month of the quarter, displays the first and second month total of sales tax invoiced, i.e. current accrued liability.

    • Remit to Avalara: The total amount to be remitted to Avalara at filing:

      • A quarterly filer in interim months will see “accrual” displayed – no remittance is required for that month.

      • A quarterly filer at the end of the quarter will see the amount due to Avalara, which includes vendor discounts accrued for the previous filing period, but does not include the current filing’s vendor discount.

    • Return Remittance: The total amount remitted on the sales tax return:

      • A quarterly filer in interim months will see “accrual” displayed – no form and associated remittance is filed for that month

      • A quarterly filer at the end of the quarter will see the amount remitted by Avalara to the taxing jurisdiction. This includes the current filing’s vendor discount, which is passed to the Avalara client during the next filing period.

  5. For a specific form, click an amount to view details for:
    • Return Remittance
    • Remit to Avalara
    • Period Liability
    • Month Tax Liability

      AvaTaxCalc-TaxReturns-ExpandedStateLine.png

Reconcile tax liabilities

This section covers reconciling your liability worksheet against your transactions. Reconciling accomplishes two important goals: identifying differences between your returns and the transactions in your Admin Console, and catching discrepancies between your accounting system and AvaTax.

Reconciling should be done between the 1st and 10th of each month following the close of the period. For example, you would reconcile May's liability worksheets between June 1st and June 10th. Reconciling should only be done once all your transactions and changes are added to the Admin Console.  

What you'll need:

  • A Tax Returns Summary report
  • A Liability Worksheet Summary report
  • Access to your Admin Console

Run reports

To begin the reconciliation process run a Liability Worksheet Summary report and a Sales and Use Tax Summary report,  and save both as spreadsheets. This section walks you through generating the required reports using the Admin Console.

  1. On the Reports tab, click Tax Returns Reports.
    2-WorksheetExports.jpg
  2. Click the Sales and Sellers Use Tax Summary report, and then set the Date Range, State, and File Format. In this case select an Excel spreadsheet. Once you've set the criteria for your report, click Generate.
    3-ReportCriteria.jpg
  3. Save the report.
  4. On the Reports tab, click Liability Worksheet Exports.
    4-ReportsTab.jpg
  5. Select the Liability Worksheet State Summary report, and then set the Date Range, State, and once again set the File Format to Excel. Once you've set the criteria for your report, click Generate.

    5-LWSSummaryReport.jpg
  6. Save the report.

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 the liability worksheetHoverTT.png for the same period. With both reports summarized by state, use the vlookup function in Excel to compare the Worksheet Summary, Amount Due to our Sales and Use Tax Summary, Total Tax and determine if the liability worksheet built correctly.

What you'll need:

  • Excel
  • Basic Excel skills: vlookup, 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 does not.
6-reportstateformat.jpg

  1. Use Text to Columns to separate the "US" declaration from the state abbreviation as we've shown below. If you do not know how to use text to columns, Microsoft's help center can walk you through the process here.

    7-worksheetsummary.jpg
  2. Use the State column and Vlookup to compare any two columns between the reports. In this case we want to check the Worksheet Amount Due against the Tax Amount - or total tax calculated on your transactions - from the Sales and Use Tax Summary report. In this example, we've put our vlookup results in column J and labeled them Report. If you do not know how to use vlookup, Microsoft's help center can walk you through the process here. Or, How to Geek provides a walk through here as well.
    8-vlookup.jpg

Identifying differences

Find differences between the liability worksheet and the Sales and Use Tax Summary report by subtracting the Total Tax field on the Sales and Use Tax Summary report from the Liability Worksheet Amount Due. Once found, check your liability worksheet for Vendor Discounts, Carryover Credits, or missing registration information as likely causes of discrepancies.

What you'll need:

  • Excel 
  • Access to your liability worksheet
  1. Subtract the Report field from the Amount Due using the report you created in the previous section.

    9-subtraction.jpg
  2. Check the filing frequency: The reports in the example above were for one month which means any state that is filed, quarterly, semi-annually, annually, etc, will have additional sales and tax not captured in the monthly report. Typically the liability worksheet will be greater than the reports in this scenario.
    1. In the Admin Console, click the Tax Returns tab to open the liability worksheet. Click > next to the state line in question to expand the return line (sometimes referred to as the line detail). The liability worksheet refreshes with the details of the return, including the filing frequency which is represented as a pie chart at the beginning of the line.
      10-offcyclefiling.jpg
      Note:
      Why is my total tax for the period captured on the Worksheet Summary Report, but not the Sales and Use Tax Summary Report?
       The Worksheet Summary Report is simply an Excel version of your liability worksheet. Whatever calculations that were made on the liability worksheet are represented on the summary report. On the other hand, the Sales and Use Tax Summary report looks at the committed transactions on your Admin Console, and only within the date range you provide. We chose to look at a single month in this example because most states are filed monthly, however, 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.
  3. Look for Vendor (timely filing) Discounts: The Sales and Use Tax Summary report does not capture some elements of the liability worksheet like vendor discounts. Therefore, when we ran the report, we only see transaction data and not any applied vendor discounts. Differences between the reports and the liability worksheet are often attributable to vendor discounts.
    1. Click > next to the state in question to expand the return line (sometimes referred to as the line detail). 
    2. Click the blue Remit to Avalara amount to open the details of that number. On the resulting table, look at the Vendor Discount line and any associated value. The vendor discount contributes to any difference you see between the Sales and Use Tax Summary report and the liability worksheet. 
      11-vendordiscounts.jpg
  4. Check for Carryover Credits: Credits that have been excluded from one period and applied in another are called carryover credits. Both the act of being excluded and being applied can result in differences between your liability worksheets and your transactions. As with vendor discounts, the reports do not include applied or excluded credits.
    1. Click > next to the state line in question to to view any applied or excluded credits.
    2. Click the blue Period Liability Sales amount to view the details of that number. If no popup appears, make sure you have popups enabled for the Admin Console. On the resulting table, look to the Applied Credits and Excluded Credits sections to view any associated credits. Applied credits may result in lower than expected liability (and sales), while excluded credits can result in higher than expected sales and liability.
      12-carryovercredits.jpg
  5. Are you registered to report sales tax? Liability collected in states (or local jurisdictions) where you are not registered to report tax is excluded from the liability worksheet - even if you've declared nexus and collected tax on those transactions! Consequently, the Sales and Use Tax Summary report may show a tax amount while the liability worksheet shows nothing due.
    1. Click > next to the state in question to view the form and return details. If you are missing registration information, you will see a yellow flag with the error message "No registration information provided." Any calculated tax is sent into accrual and not reported until Avalara receives your registration information for that state.
      13-noregistration.jpg

Adjust tax liabilities

Tax liability adjustments due to prior tax payments, tax prepayments, vendor discounts, and other adjustments are recorded on the liability worksheetHoverTT.png.

  1. On the Tax Returns tab, select Liability Worksheet from the navigation bar.
    TaxReturns-tab.png
  2. Select a Separate Reporting Entity.
    AvaTaxCalc-TaxReturns-SelectLiabilityWorksheetSRE.png
  3. Filter the liability worksheet to display records for a specific month or group of states.
  4. Click the Expand button next to a State.
    AvaTaxCalc-TaxReturns-ClickExpandforaState.png
  5. For a specific form, click an amount to adjust:
    • Remit to Avalara
    • Return Remittance
      AvaTaxCalc-TaxReturns-ExpandedStateLine.png
  6. In the Remit To Avalara Details or the Return Remittance Details dialog, click one of the following:
    • Prior Payment
    • Pre Payment
    • Vendor Discount
    • Other Adjustments

      AvaTaxCalc-TaxReturns-RemittoAvalaraDetails.png
  7. In the Return Payment and Discount Detail dialog, type an amount in one or more of the fields.

    AvaTaxCalc-TaxReturns-ReturnPaymentandDiscountDetail.png
  8. Click Save. Click OK. Click Close Window.
    • Amounts will be locked if a return has been approved or if the value has been pre-calculated by the system.
  9. Filter the liability worksheet again to display updated records for a specific month or group of states.
 

Approve the tax liability for a state

After reviewing and reconciling your tax liabilities, approve the tax liabilities 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.

  1. On the Tax Returns tab, select Liability Worksheet from the navigation bar.
    TaxReturns-tab.png

  2. Select a Separate Reporting Entity.
    AvaTaxCalc-TaxReturns-SelectLiabilityWorksheetSRE.png

  3. Filter the liability worksheet to display records for a specific month or group of states.

  4. Select Approved in the filing status column for one or more states.

    AvaTaxCalc-TaxReturns-SelectApprovedforaState.png

  5. Click Save.