Differences between your general ledger and liability worksheet are almost always attributable to one or both of the following:
- Vendor discounts (a.k.a. timely filing discounts)
- Applied and excluded credits
The amount in the Remit to Avalara field directly corresponds to the amount in Amount Due field on the top line of your liability worksheet. It's the amount Avalara pulls from your account for that specific return. The amount in the Return Remittance field is the amount paid to the state at the time of filing. Occasionally, the amounts in the Amount Due field, Remit to Avalara field, and Return Remittance field may not match your general ledger. In some cases, the amounts in the Remit to Avalara field and Return Remittance field may not match each other.
Liability Worksheet Adjustments
One of the most common causes of differences between the liability worksheet and your general ledger is vendor (a.k.a. timely filing) discounts. Vendor discounts appear on the return under Return Remittance. Vendor discounts can affect the amounts in the Return Remittance and Remit to Avalara fields, causing neither number to match your general ledger.
Returns recognizes vendor discounts in real-time on the return in the period in which they are earned. They display under Return Remittance. For example, if you earn a vendor discount in June, you see it on the June return and on the liability worksheet under Return Remittance.
The amount in Remit to Avalara is greater than what we pay the taxing jurisdiction. It appears as though we over-collected.
You can use liability worksheet export reports to help you reconcile with your general ledger.
To see how the discrepancy was rectified:
- On the Tax Returns tab, click Liability Worksheet.
- 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, the amount is listed 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; only the positive liability (or a zero dollar return) is filed. These applied and excluded credits, often called carryover or carryforward credits, are carried forward to the next filing period. The liability worksheet checks to see if there's enough liability available to offset the amount of the credit. If there is, the AvaTax applies the credit against the return. If the credit can't be applied in full, once again it's excluded and carried forward. (Avalara doesn't apply partial credit; liability must be equal to or greater than the credit applied.) The credit continues to be carried forward until there's a period with enough liability to absorb the credit completely.
To identify applied and excluded credits:
- On the Tax Returns tab, click 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 appear only in the first month of the period and 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 won't 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 filing late or amended returns for specific guidelines on how to submit a request.