The consumer use assessment and accrual capability in NetSuite lets you assess the consumer use tax on your 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 will also settle your NetSuite GL accounts for the accrual amount accordingly. Downloading a file of the consumer use tax calculated on your transactions can minimize audit risk by giving you better information about your liability.
- Using this feature may cause additional fees. Talk to your Customer Account Manager (CAM) for more information.
- Consumer Use Tax is not applicable for Canadian purchase transactions
Consumer Use Tax on Purchase transactions can be calculated in the following ways:
- Real-time consumer use tax assessment (to calculate the consumer use tax for a transaction in real-time)
- Import transaction details into AvaTax. (to calculate the consumer use tax for a transactions listed in an excelsheet)
Configure Consumer Use Tax feature
To send consumer use tax transactions to AvaTax, you need to set how you want to calculate the consumer use tax for a transaction.
- In AvaTax for NetSuite, go to Avalara > Setup > Configure AvaTax.
- In the Consumer Use Tax / Input VAT tab:
- Click Enable UseTax Assessment on Vendor Bill to enable the consumer use tax service for a vendor.
- Select the Use Tax Payable Liability Account and GL Account to Debit as applicable for the chosen vendor. In GL Account to Debit, you can chose either Individual Item/Expense Account or Select a Use Tax Debit GL Account. If you chose Select a Use Tax Debit GL Account, then you need to select a relevant account from the Use Tax Debit GL Account drop-down list.
- Click Accrue Consumer Use Tax when a Vendor Bill is approved to enable the accrual of consumer use tax when a vendor bill is approved and then posted to the Admin Console.
The accrue amount is credited to the default Use Tax Payable Liability account set in the AvaTax configuration. View the GL impact entries under the AvaTax tab in the purchase invoice. Transactions deleted/voided in NetSuite are voided in the Admin Console.
Real-time Consumer Use Tax assessment
In real-time consumer use tax calculation using AvaTax for NetSuite, the AvaTax calculated use tax amount for a transaction is calculated and the difference between the AvaTax calculated Use Tax & the Vendor charged tax amount is displayed. On approval, the AvaTax calculated use tax amount is posted to Dashboard as the Accrual amount. To calculate real-time consumer use tax:
- Ensure that the Enable UseTax Assessment on Vendor Bill option is enabled
- In AvaTax for NetSuite go to Lists > Relationships > Vendors, click the Assess Use Tax on Bill (AVATAX) checkbox.
The Assess Use Tax on Bill (AVATAX) option is available only if the Enable Use Tax Assessment on Vendor Bill is enabled in the Configure Avalara page.
If Assess Use Tax on Bill (AVATAX) checkbox is enabled, then this vendor is marked for Use Tax Assessment and you can use AvaTax to calculate the consumer use tax for this vendor's transactions.
In AvaTax for NetSuite go to Transactions > Payables > Enter Bills and enter the mandatory details for a bill.
- Click on Verify tax button. The use tax details for this transaction are calculated and displayed.
- If you click OK, then the AVATAX tab will show the Accure Use Tax box as checked and display the use tax details in the fields. If you click Cancel, then the AVATAX tab will show the Accure Use Tax box as unchecked and display the use tax details in the fields for future reference.
- For a bill with use tax enabled for the vendor, if the Save button is clicked, then a message will be shown with the use tax details. If you click on OK, then the accrue amount will be posted on the dashboard. If you click on Cancel, then the amount will not be posted on the dashboard.
- For a bill with use tax disabled for the vendor, after clicking on Verify Tax or Save, the message "This Document has not used AvaTax Services for Tax Calculation. Use Tax Assessment is disabled for Vendor" will be displayed.