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Calculate Consumer Use Tax

AvaTax calculates consumer use tax on purchase invoices or purchase transactions. Some pieces of accounting software require you to enable consumer use tax calculation, but you don't have to do so in AvaTax. If you feel you need a refresher, check out our short guide to consumer use tax , or watch our video describing the difference between sales tax, seller's use tax, and consumer use tax.

Configure consumer use tax

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

  1. Go to Tools > System > AvaTax Configuration > Tax Calculation and select the Enable Use Tax Assessment option.
  2. Go to Tools > Utilities > AvaTax > Update > AvaTax Vendor Use Tax Assessment and select the Enable use tax assessment option.
    DGP -AvaTax Vendor Use Tax Assessment.png

Calculate consumer use tax

To calculate consumer use tax, follow these steps:

  1. In Microsoft Dynamics GP, go to either Transactions > Purchasing > Receiving Transaction Entry or Transactions > Purchasing > Enter/Match Invoices, as applicable.
    • To create a new invoice, select Type as Shipment/Invoice and type all required field details. 
    • For an existing invoice, select the appropriate Receipt No.
  2. To calculate the consumer use tax, either click Save or go to Additional > Verify Tax.
  • If the vendor/seller charged tax is correct, then you will receive the following message:

    DGP - Overcharged.png

  • If the vendor/seller charged tax is greater than AvaTax, then you will receive the following message:
    DGP_-_Overcharged.png
  • If the vendor/seller charged tax is less than AvaTax, then you will receive the following message:
    DGP_-_Under_Charged.png
    • Click No if you don't want to accrue the self-assessed consumer use tax.
    • Click Yes if you want to accrue the self-assessed consumer use tax. After you click Yes, the consumer use tax is calculated for this transaction and it is posted to the Admin Console.

Calculate consumer use tax for many transactions

To calculate consumer use tax for a batch of transactions in AvaTax for Microsoft Dynamics GP, follow these steps:

  1. Ensure that the Enable Use Tax Assessment option, for a vendor, is enabled in the configuration section.
  2. In the Purchasing Batch Entry window, after the tax calculation for a batch, you can see the following details in a table:
    • Document number
    • Document subtotal
    • Calculated Tax
    • Vendor charged Tax
    • Use Tax Accrue(Vendor charged Tax-Calculated Tax)

    DGP_Consumer Use_Tax_Batch_Options.png

  3. You can select a list of transactions and chose to calculate consumer use tax for them. To calculate consumer use tax, click Additional > Verify Use Tax (AvaTax) DGP_Verify_use_tax_option_in_Batches.png
  4. After successful calculation of consumer use tax for the selected transactions, GL entries are created in Microsoft Dynamics GP.

    DGP_GL_Entries_created_after_Posting.png

Calculate Consumer Use tax for Payable Transaction entry

Note

Calculation of consumer use tax for payable transaction entry is available only for the following document types:

  • Invoice
  • Finance charges
  • Miscellaneous charges

To calculate consumer use tax for payable transaction entry in AvaTax for Microsoft Dynamics GP, follow these steps:

  1. In Microsoft Dynamics GP, go to Transactions > Purchasing > Transaction Entry.
    • To create a new invoice, select Document Type and type all required field details. 
    • For an existing invoice, select the appropriate Voucher No.

    DGP_1Payable Transaction Window.png

  2. Go to Additional > Select Ship to Site.
  3. To calculate the consumer use tax based on the ship-to address, in the Select Ship to Site window, select the Site ID  and click OK. If you wish to calculate the consumer use tax based on the company address, do not select the Site ID and click Cancel.

    DGP_2SelectShiptoSite.png

  4. To calculate the consumer use tax, either click Save or go to Additional > Verify Tax. If you have not selected the Site ID, the following message is displayed.
    • Click Yes to calculate the consumer use tax based on the ship-to address. The Select Ship to Site window opens. Select the Site ID and click OK

       

    • Click No to calculate the consumer use tax based on the company address. 

    DGP_3SiteSelectMessage.png

  5. Based on the consumer tax calculated, one of the following message is displayed:
  • If the vendor/seller charged tax is correct, then you will receive the following message:

    DGP_4VendorChargeEqual.png

  • If the vendor/seller charged tax is greater than AvaTax, then you will receive the following message:
    DGP_5VendorChargeMore.png
  • If the vendor/seller charged tax is less than AvaTax, then you will receive the following message:
    DGP_6_2Post.png
    • Click No if you don't want to accrue the self-assessed consumer use tax.
    • Click Yes if you want to accrue the self-assessed consumer use tax. After you click Yes, the consumer use tax is calculated for this transaction and it is posted to the Admin Console.
  • The accrue amount is posted to the general ledger mentioned in the use tax configuration settings.

    DGP_8GeneralLedges.png

    The Note, yellow notepad next to the Journal Entry,  displays the general ledger entry along with the voucher number.

    DGP_9GLNote.png