In QuickBooks Desktop, calculate and verifyif a vendor did not charge tax, assign the use tax to an accrual account, and send the transaction to AvaTax for consumer use reporting.
Enable consumer use tax calculation in QuickBooks Desktop
To enable and configure consumer use tax calculations in QuickBooks Desktop for registered vendors, do the following:
- In QuickBooks Desktop, go to AvaTax Configuration > Tax Calculation > Consumer Use Tax Assessment Settings.
- Select Enable Use Tax Assessment On Vendor Bill.
- Next to Use Tax Payable Liability Account, select the account to which the accrual amount is to be credited.
- Next to Use Tax Debit GL Account, select the account from which the accrual amount is to be debited.
- Next to Vendor Paid Tax Line Item, select the line item for which the vendor use tax is to be configured. When you create a purchase invoice, select this line item and enter the amount. QuickBooks Desktop defines this amount as the vendor charged tax. On the purchase invoice, if this line item isn't added, then the vendor charged tax is 0.
- If you do not have a line item for which the vendor tax is to be configured, go to QuickBooks Desktop menu Lists > Item List and create an item with Service Inventory / Non Inventory / Other Charge.
- To select vendors for whom you want to calculate consumer use tax, click Vendor Tax Accrue Update Utility and select the appropriate vendors.
- Click OK.
Add vendor-paid sales tax
To calculate consumer use tax, a purchase invoice needs to have a line item that defines the line amount as the vendor-charged tax. On the purchase invoice, if this line item isn't added, then the vendor-charged tax is 0. To add vendor-paid sales tax, do the following:
- Ensure that you enable consumer use tax calculation.
- Create/Select a vendor bill and add item(s) as required.
- Add the Item that you have created for vendor paid tax and the tax amount in the Amount. If this line item isn't added, AvaTax for QuickBooks Desktop considers the vendor paid tax as 0.
You can now calculate consumer use tax for this vendor bill.
Calculate consumer use tax
In QuickBooks Desktop, calculate consumer use tax for vendor bills using one of the following methods:
- Create a purchase order and then create a bill
- Create a bill
- In QuickBooks Desktop, click Enter Bills.
- To create the bill, select Bill and create a new bill. To open an existing bill, type the Ref. No. of the purchase order.
- Enter the bill details.
- Consumer use tax is calculated when you save the bill. Click Save & Close to close the bill, or click Save & New to close this bill and create a new one.
- Messages are displayed based on the accrual amount suggested.
- If the amount of tax the vendor charged matches what AvaTax calculated, the accrual amount is 0.
- If the amount of tax the vendor charged is greater what AvaTax calculated, the vendor may have overcharged you tax.
- If the amount of tax the vendor charged is less than what AvaTax calculated, the vendor may have undercharged you tax. You're given the option to self-assess use tax. If you select Yes, consumer use tax is calculated for the transaction and is posted to the Admin Console and the associated GL accounts.