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Calculate Consumer Use Tax on Purchase Transactions

The consumer use assessment and accrual capability in Microsoft Dynamics AX lets you assess the consumer use tax on purchases in real-time and accrue the applicable tax amount. Calculate and verify the use tax if the vendor hasn’t charged it, accrue the use tax and save the transaction to AvaTax for consumer use reporting. AvaTax also settles your Microsoft Dynamics AX GL accounts for the accrual amount. Downloading a file of the consumer use tax calculated on your transactions can minimize audit risk by giving you better information about your liability. Once you configure Microsoft Dynamics AX 2012 for consumer use tax, you can calculate consumer use tax for a single transaction or many transactions at a time.

Configure consumer use tax

Before you start calculating consumer use tax in Microsoft Dynamics AX, enable the following use tax assessment options in Microsoft Dynamics AX:

  1. Go to Microsoft Dynamics AX > System Administration > Setup > Licensing > License Configuration > AvaTax and select the Consumer Use Tax Assessment option.

  2. Go to Microsoft Dynamics AX > AvaTax > Setup > AvaTax Configuration > Accounts Payable: 
    1. In the Consumer use tax section, select Enable Use Tax Assessment.

    2. In the Consumer use tax section, click Mark vendor to assess. In the Consumer Use Tax Mapping window, select the range of your vendors. Select Enable Use Tax Assessment and click OK.

    3. In the Posting Account section, select Use Tax liability account. If you select GL Account to Debit as Single Account, then you have to select the associated Use Tax Debit GL Account.

Calculate consumer use tax for a vendor invoice

  1. In Microsoft Dynamics AX, go to Accounts Payable > Common > Vendor Invoices > Open vendor invoices. 
  2. In the Open vendor invoices window, go to Invoice > Invoice and click Vendor invoice.

  3. To calculate and view the consumer use tax, in the Vendor invoice window, go to Avalara > Use Tax and click Use Tax Assessment.

    Messages are displayed based on the accrue amount suggested. Click OK.

    • The amount of tax charged to the vendor/seller is correct, i.e. the accrue amount is 0. 

    • The amount of tax charged to the vendor/seller is greater than the amount charged by AvaTax, i.e. the accrue amount is overcharged.

    • The amount of tax charged to the vendor/seller is less than the amount charged by AvaTax, i.e. the accrue amount is undercharged.

  4. To calculate and post the undercharged consumer use tax, in the Vendor invoice window, go to Post and click Post.

    The following message is displayed.

    • If you don't want to accrue the self-assessed consumer use tax, click No.
    • If you want to accrue the self-assessed consumer use tax, click Yes. After you click Yes, the consumer use tax is calculated for this transaction and it is posted to the Admin Console and the associated GL. accounts. The following message is displayed.

Add vendor-paid sales tax to a purchase invoice

  1. In Microsoft Dynamics AX, go to Accounts Payable > Common > Purchase Orders > All Purchase Orders. 
  2. In the All Purchase Orders window, go to the Invoice tab, and click Invoice.

  3. In the Vendor invoice window, to view the sales tax amount, go to Financials > Tax and click Sales Tax.
  4. The Sales tax transactions window displays sales tax details for the transaction.

  5. In the Sales tax transactions window, go to the Adjustment tab: 
    1. Enter the vendor-paid sales tax amount in the Total actual sales tax amount field, and click Apply.
    2. The total Microsoft Dynamics AX 2012 calculated sales tax is displayed in the Total calculated sales tax amount field, and the vendor-paid sales tax amount is displayed in the Total actual sales tax amount field.
    3. Click Close

  6. Add the invoice details and then post the invoice.

Calculate consumer use tax for many transactions

To calculate consumer use tax for many pending transactions at once in Microsoft Dynamics AX 2012, follow these steps: 

  1. To view the list of pending vendor invoices, go to Accounts Payable > Common > Vendor Invoices > Pending vendor invoices. 
  2. To calculate consumer use tax for many pending vendor invoices, go to Avalara AvaTax > Utilities > Consumer Use Tax Batch.

    AX2012_Setup_Assistant.png

  3. In Consumer Use Tax Batch utility window:

    1. Select the range of invoice dates.
    2. Select the range of vendors.
    3. Click Verify Tax. The table lists the vendor invoices based on your selection criteria in steps 3a and b.
    4. To accrue the self-assessed consumer use tax amount for an vendor invoice with Status as Under Charged, select To Accrue for that invoice. If you try to select vendor invoices with Status as Over Charged or Correctly Charged, the following message is displayed:

      • To select all the vendor invoices with Status as Under Charged, click Mark All.
      • To unselect all the vendor invoices with Status as Under Charged, click Unmark All.
    5. Click Close.
  4. To post the undercharged consumer use tax using Post
    1. Go to Accounts payable > Vendor invoices and click Pending vendor invoices. Select the vendor invoice that you want to post.

    2. In the Vendor invoice window, go to Vendor Invoice > Post and click Post.

    3. After the vendor invoice is posted in Microsoft Dynamics AX 2012, the following message is displayed:

  5. To post the undercharged consumer use tax using Batch
    1. Go to Accounts payable > Vendor invoices and click Pending vendor invoices. Select the vendor invoice that you want to post.

    2. In the Vendor invoice window, go to Vendor Invoice > Process and click Batch.

    3. In the Batch processing window, select Batch processing. If you want to change the batch settings, click Recurrence. Click OK.

    4. In the Vendor invoice window, go to Vendor Invoice > Post and click Post.

    5. The following message is displayed:

    6. Go to System Administration > Inquiries > Batch Jobs.
    7. In the Batch Jobs window, click Functions. The Overview tab displays the list of all the batch jobs and their status. To check for the latest status of this batch, click Refresh. When the batch is processed, the status of this batch changes to Ended and the transactions are posted to the Admin Console.

    8. In the Admin Console, transactionsHoverTT.png are stored in the Admin Console on the transactions tab. In the example below, you can see the details of the invoice shown above. For more information, read reviewing transactions.