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Verify Vendor-Calculated Consumer Use Tax

AvaTax calculates consumer use tax on purchase invoices or purchase transactions. Some accounting software requires you to enable consumer use tax calculation in their configuration, but you don't have to do so in AvaTax. If 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.

Verify vendor-calculated consumer use tax on invoices

To verify consumer use tax on an invoice:

  1. To enter and verify tax on a new invoice:
    1. In Microsoft Dynamics GP, go to Transactions > Purchasing > Receivings Transaction Entry.
    2. For Type, select Shipment/Invoice, complete all required field details, and then click Save.
  2. To open an existing invoice and verify tax on it:
    1. In Microsoft Dynamics GP,go to one of the following, as appropriate:
      • Transactions > Purchasing > Receivings Transaction Entry 
      • Transactions > Purchasing > Enter/Match Invoices
    2. In Receipt No or Receipt Number, depending on the dialog box you're in, select the invoice, click Additional, and then click Verify Use Tax.
  3. Take the appropriate action with the resulting dialog box:
    • If the tax charged by vendor/seller is correct, a success message displays.
    • If the vendor/seller charged an amount greater than what AvaTax calculates, a dialog box displays how much the vendor may have overcharged. Take whatever action your company needs to take to rectify any overpayment of tax to the vendor.
    • If the vendor/seller charged an amount less than what AvaTax calculates, a dialog box displays how much AvaTax suggests you accrue and remit to the appropriate tax authority. In the dialog box, you choose your next action:
      • Click No if you don't want to accrue the self-assessed consumer use tax.
      • Click Yes to accrue the self-assessed consumer use tax. Consumer use tax is calculated and posted to AvaTax, the amount is accrued to the accrual account you designated, and the general ledger entry and a voucher number display in the yellow notepad next to Journal Entry.

Verify vendor-calculated consumer use tax on a batch of purchase transactions

Purchasing transactions that you've assigned to the same batch when you entered them can be verified at once instead of taking verification steps for each individual transaction in the batch.

To verify consumer use tax on a batch of purchasing transactions:

  1. In Microsoft Dynamics GP, go to Transactions > Purchasing > Purchasing Batches.
  2. In Batch ID, select the batch for which  you want to verify vendor-calculated consumer use tax.
  3. Click Additional, and then click Verify Use Tax. AvaTax verifies the tax, and:
    • Creates GL entries.
    • Displays a table with a row for each document in the batch, indicating tax amounts and whether you were over- or under-charged.

Verify vendor-calculated consumer use tax on a payable transaction entry

You can only verify vendor-calculated consumer use tax for a payable transaction entry on the following document types:

  • Invoice
  • Finance charges
  • Miscellaneous charges

To verify vendor-calculated consumer use tax on a payable transaction entry:

  1. In Microsoft Dynamics GP, go to Transactions > Purchasing > Transaction Entry.
  2. To have AvaTax verify tax:
    • To create a new payable transaction entry, select Document Type, complete all required field details, and then click Save.
    • To open an existing payable transaction entry, select the transaction in Voucher No,click Additional, and then click Verify Use Tax.
  3. If a message displays indicating you haven't selected the site ID:
    • Click Yes to calculate the consumer use tax based on the ship-to address. The Select Ship To Site window opens, allowing you to select a site ID.
    • Click No to calculate the consumer use tax based on the company address. 
  4. Take the appropriate action with the resulting dialog box:
    • If the tax charged by vendor/seller is correct, a success message displays.
    • If the vendor/seller charged an amount greater than what AvaTax calculates, a dialog box displays how much the vendor may have overcharged. Take whatever action your company needs to take to rectify any overpayment of tax to the vendor.
    • If the vendor/seller charged an amount less than what AvaTax calculates, a dialog box displays how much AvaTax suggests you accrue and remit to the appropriate tax authority. In the dialog box, you choose your next action:
      • Click No if you don't want to accrue the self-assessed consumer use tax.
      • Click Yes to accrue the self-assessed consumer use tax. Consumer use tax is calculated and posted to AvaTax, the amount is accrued to the accrual account you designated, and the general ledger entry and a voucher number display in the yellow notepad next to Journal Entry.