Your liability worksheet Amount Due is based on the committed transactions in your Admin Console, pre and prior payments, vendor - or timely filing - discounts, and "other" adjustments. Any of these variables can lead to an Amount Due that does not match your general ledger but is perfectly normal and expected. We'll talk about each of these variables here. If you have not already, read the liability worksheet introduction before continuing.
At the far end of the liability worksheet, you'll see two fields: Remit to Avalara and Return Remittance. Remit to Avalara directly corresponds to the Amount Due on the top line of your liability worksheet and is the amount Avalara pulls from your account for that specific return. Return Remittance is the amount paid to the State at the time of filing. The Remit to Avalara and Return Remittance may not match, and in some cases neither will match your general ledger.
Differences between your general ledger and liability worksheet are almost always attributable to one or both of the following causes:
- Vendor discounts (also called timely filing discounts)
- Applied and excluded credits
Liability worksheet adjustments
One of the most common causes of differences between the liability worksheet and your general ledger are vendor, or timely filing, discounts. Vendor discounts will appear on the return under Return Remittance. Vendor discounts can affect your Return Remittance and your Remit to Avalara amounts, causing neither number to match your general ledger. Let's first look at the difference between the Return Remittance and Remit to Avalara amounts.
Vendor Discounts are recognized in real time on the return in the period in which they are earned and appear under Return Remittance. In other words, if you earn a Vendor Discount in June, you will see it on the June return and on the liability worksheet under Return Remittance. The Remit to Avalara amount will be greater than what we pay the taxing jurisdiction, and it will appear as though we over collected. Let's see how that discrepancy is rectified.
- Log in to your Admin Console and click the Tax Returns tab.
- In the liability worksheet, click the arrow > next to the state or province abbreviation to expand the return line.
- Click the blue Return Remittance amount to open the field details. If a Vendor Discount was applied, you will see it in the Vendor Discount field.
- In a separate window or tab, open the liability worksheet for the following period so you can compare the two. Click the blue Remit to Avalara amount to open the field details. You see the same vendor discount you saw a period earlier now under Remit to Avalara in the following period because we've reduced what you remit to Avalara by the amount of the vendor discount.. The vendor discount earned on the return the previous period is now recognized under Remit to Avalara.
Any credit that would result in a negative return is excluded from the return and only the positive liability (or a zero dollar return) is filed. These applied and excluded credits, often called "carryover credits," are then carried forward to the next filing period, and the liability worksheet checks to see if there is enough liability available to offset the amount of the credit. If there is, the system applies the credit against the return. If the credit can't be applied in full, it will once again be excluded and carried forward.The credit will continue to be carried forward until there is a period with enough liability to absorb the credit completely. Let's look at how to identify applied and excluded credits in the Admin Console.
- Log in to your Admin Console and click the Tax Returns tab to open the liability worksheet.
- Go to the return line in question. Negatives on the top line are almost surely a sign that a credit, number of credits, were sent across for the month.
- Click the arrow > next to the state abbreviation to expand the return line (notice the entire line is positive).
The remainder of the return line is positive, while the top line (highlighted dark gray) shows negatives until the far right column where we see a positive amount due.
- Click the Period Liability Sales amount to open the field details. Applied and Excluded Credits are found under Period Liability Sales.
For multi-month periods (quarters, semi-annual, annual, etc), excluded credits will appear only in the first month of the period and will show initially as applied, even if they are ultimately excluded again at the close of the period.
- Go to the period where you suspect a credit has been Applied. Notice the dramatic drop in tax from Month Tax Liability Sales to Amount Due. An applied credit likely has a document date outside the one month period, and therefore isn't incorporated into the top line calculation (until we get to Amount Due).
- Click the arrow > to expand the return line and and click the Period Liability Sales amount. On the resulting table you can see the credit is now applied.
If you have an excluded credit that will not be applied for the foreseeable future, you can resolve the issue by amending the original return with the credit in place. Send an email to firstname.lastname@example.org with the document code (invoice number) of the credit and a request to amend the return and period in question. Be sure to mention that the credit is in carryover and you want to amend the original return (see our documentation on amending and backfiling for specific guidelines on how to submit a request).