Skip to main content
Avalara Help Center

Generate the Liability Worksheet

This article applies to:Avalara Returns

The liability worksheetHoverTT.png is a monthly summary of tax activity and liability by state. The worksheet provides up-to-date financial information for review and reconciliationHoverTT.png with your accounting, ERP, e-commerce, m-commerce, or POS application. Use the liability worksheet to:

  • Review monthly transactionHoverTT.png activity in 3 different types of reports
  • Reconcile tax liabilities with your accounting, ERP, e-commerce, m-commerce, or POS application
  • Approve tax liability amounts
  • Track accrual amounts

After successfully reviewing and reconciling this financial information, you then approve the tax liability amounts on the liability worksheet. Avalara can then begin the generation of tax returns and remittances. The information you approve is used to complete state, county, city, and special tax jurisdiction tax return forms.

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

Where is the liability worksheet?

The liability worksheet "builds" on the 5th day of the month following the close of the period, meaning, the liability worksheet for May is built on June 5th, while the liability worksheet for June is built on July 5th, and so on. If you open your liability worksheet before the 1st, you'll see the most recently completed period.

Follow these steps to open your liability worksheet:

  1. Log in to the Admin Console.
    1-LWS-login.jpg
     
  2. Click the Tax Returns tab.
    2-LWS-TRTab.jpg
     

When is the liability worksheet generated?

The liability worksheet is generated on the 5th day of each month.

After the liability worksheet is generated, and until the evening of the 10th day of each month, tax liabilities can be reviewed, reconciledHoverTT.png, and approved. Avalara must comply with state-mandated deadlines for filing tax returns. Therefore, AvaTax moves all unapproved tax liability records to a filing status of "pending on behalf" on the evening of the 10th day of each month. Tax liability records with a filing status of "approved" or of "pending on behalf" are locked for that month and cannot be altered.

Starting on the 11th day of the month, all tax liability records are locked and the filing status is:

  • "Pending filing" for records that previously had a filing status of "approved"
  • "Pending on behalf" for records that previously did not have a filing status of "approved"

After a tax return is generated, the filing status is:

  • "Filed" for records that previously had a filing status of "pending filing"
  • "Filed on behalf" for records that previously had a filing status of "pending on behalf"

Set liability worksheet options

Use the liability worksheet options to:

  • Control the time each month when AvaTax generates the liability worksheet for each company in your AvaTax account.

  • Set the default actions AvaTax takes if the liability worksheet is not approved in a timely manner

  1. On the Settings tab, click Tax Liability Worksheet Options.
    AvaTaxCalc-Settings-ClickTaxLiabilityWorksheetOptions.png

  2. On the Tax Liability Worksheet Options screen:

    1. Select a day of the month to run liability worksheets on. This selection determines the day of the month on which a liability worksheet is generated.
    2. Select a Review Action Default. This selection identifies the default filing status to be used in the event a line with tax due on the liability worksheet is not approved prior to the deadline on the 10th of the month. Select one of the following options
      • Do Not File

        • Avalara does not generate a tax return for each taxing authority.

        • This is selection is not available for participants in the SST project. If Avalara is your CSP and you have selected the Do Not File option, it is ignored in SST States as Avalara is required to file tax returns.

      • File without Payment

        • Avalara generates the tax return and submits the tax return without an associated remittance to each taxing authority.

        • Your business is responsible for any penalties and/or interest that are applied as a result of non-payment.

      • File with Payment

        • Avalara generates the tax return, collects funds from the business, and submits the tax return with associated remittance to each taxing authority.

        • This is the default recommended setting to avoid any penalties and/or interest.

    3. Select a Zero Dollar Action Default. This selection identifies the default filing status to be used in the event a line with no tax due on the liability worksheet is not approved prior to the deadline on the 10th of the month. Select one of the following options:
      • Do Not File
        • Avalara does not generate a tax return for each taxing authority.

        • This selection is not available for participants in the SST project. If Avalara is your CSP and you have selected the Do Not File option, it is ignored in SST States as Avalara is required to file tax returns.

      • File without Payment

        • Avalara generates and submits a zero dollar tax return to each taxing authority.
          AvaTaxCalc-Settings-TaxLiabilityWorksheetOptionFields.png

  3. Click Save.

Note:

It is your responsibility to confirm that the amounts shown on the liability worksheet are accurate and reconcile with your accounting, ERP, e-commerce, m-commerce, or POS application.

Where does the data on the liability worksheet come from?

The majority of your liability worksheet is based on the committed transactions in your Admin Console (uncommitted transactions are not captured), while the document date determines in which period the transaction is reported. The remainder of your liability worksheet is based on pre and prior payments, vendor - or timely filing - discounts, and "other" adjustments.

See our documentation on remit to Avalara and return remittance for more information on how things like transactions, credits, and discounts can affect your total amount due.

Liability worksheet overview

The liability worksheet is organized into two layers: the top line and the return line. The top line is what you see when the liability worksheet loads. It's a summary of the most recent month's worth of transactions, and contains nothing more than simple addition and subtraction. The return line is a one line representation of your return and takes into account variables like discounts, credits, and other adjustments (variables not included on the top line).

  1. The liability worksheet is a table displaying your tax returns for the period. Basic navigation and filter options are available across the top of the liability worksheet, while the main panel displays your month sales and tax.

    3-LWS-overview.jpg
    Note: 
    The top line of the liability worksheet (the rows of numbers you see when you first load your liability worksheet), is a summary of the most recent month's worth of data. It is not necessarily representative of what will be filed.
  2. A closer look at the navigation header shows the filter options available to you. You can view your liability worksheets by reporting entity, period, or worksheet type (original or amended).

    4-LWS-header.jpg
     
  3. Click the arrow > next to the state or province to view the return line. Shaded pie charts indicate the filing frequency of the return.

    5-LWS-frequency.jpg
     
  4. Anything blue is clickable, meaning you can click the number to open the details behind that number, including the calculations and adjustments.

    6-LWS-returnline.jpg

What goes in the return?

The Total Amount Due at the bottom of the liability worksheet is the amount Avalara pulls from your account prior to filing. Typically, these funds are pulled on the 12th of the month unless that day falls on a weekend or banking holiday. In most cases, the pull will happen the next business day if the 12th is not available. 

The Total Amount Due is based on the Remit to Avalara amount for each return and totaled at the bottom of the liability worksheet. Remit to Avalara is the amount Avalara pulls from your bank account and may not always match the Return Remittance (the amount filed on the return). For more information on differences between Remit to Avalara and Return Remittance, see reconciling the liability worksheet

  1. Period Liability Sales shows the accrued sales tax for the period (a similar field exists on the return line for consumer use as well, but we have not shown it here). This number does not take into account pre or prior payments; it is simply your calculated tax with more advanced logic for applying or excluding credits.

    8-LWS-PLS.jpg
     
  2. Remit to Avalara - or the amount Avalara pulls from your account - directly transfers to the top line Amount Due. Return Remittance - or the amount filed on the return - is what was ultimately paid to the state. For reasons like vendor discounts and credits, Remit to Avalara and Return Remittance might not always match.

    9-LWS-RTA.jpg
     
  3. The Total Amount Due is located at the bottom of the Amount Due column on the liability worksheet. This is the amount our Treasury team will use to pull funds from your account (they do not pull state by state). For this reason, it is important that you reconcile and approve your liability worksheets every period.

    7-LWS-overview.jpg

What do I need to do with my liability worksheet?

Review and approve. Every month you should review and approve your liability worksheet, making sure you understand the numbers and that they match your expectations. If you are concerned with a number on the liability worksheet, take time to figure out why that number is what it is. Check out our documentation on reconciling your liability worksheet. This process walks you through reconciling your liability worksheets against the transactions in your Admin Console.

Avalara provides an opportunity from the 1st - 10th of every month to reconcile and make adjustments to your liability worksheets. If you are satisfied with a return, approve the worksheet.

If you approve early and need to unlock your returns prior to 5pm Pacific Time on the 10th, our Avalara Support team can assist you.

Generate liability worksheet reports

You can select the details and generate the liability worksheet report from Reports > Standard Sales Tax reports > Liability Worksheet Exports section in the Admin Console. The report can be generated in Microsoft Excel format and either saved on your local machine or printed.