Find the answers to common questions about consumer use tax and Avalara Consumer Use.
What is consumer use tax?
It is a tax that is self-assessed, reported and paid by the purchaser of those goods. It is most-commonly managed and reported by the tax manager or tax department, but sometimes by the purchasing agent or accounts payable manager or team.
If my vendor charges tax on my purchase, is that considered consumer use tax?
No, the tax that your vendor includes on the invoice for your purchases is sales tax.
What is the difference between consumer use tax and seller’s use tax?
Consumer use tax is determined after (sometimes well after) the purchase, and is representative of the ultimate and accurate use and location that the product was used or consumed. It is paid by the purchaser directly to the state and/or local taxing authorities. Seller’s use tax is determined and collected by the seller (similar to sales tax) and does not factor in the actual use, purpose, and location where that product was used or consumed.
Can consumer use tax be accurately determined at the time of purchase?
It sometimes can, but the best approach is to have a monthly process using the Avalara Consumer Use module. This will insure accurate capturing and reporting of all scenarios that trigger consumer use tax liability. The Avalara Consumer Use module also uncovers instances where overpayment of tax on purchases are occurring, resulting in significant cost reduction over time.
Why should businesses use Avalara Consumer Use instead of importing consumer use tax transactions directly into AvaTax?
Avalara AvaTax can calculate consumer use tax at the time of the initial purchase, platform does not determine consumer use tax beyond the time of purchase. The Avalara Consumer Use module will provide the functionality needed to be compliant.
Which connectors currently offer a “built-in” option for determining consumer use tax?
Dynamics GP, Dynamics 365 BC / Dynamics NAV, Dynamics 365 Finance & Operations /Dynamics AX, NetSuite, Epicor (not all Epicor connectors), SAP ECC / Hana (NOT B1), Oracle EBS /Oracle Cloud, JDE (JD Edwards) and Peoplesoft.
What is a major advantage/differentiator of the Avalara Consumer Use module?
Avalara Consumer Use has an “Exclude State” option within allocations. This is important for scenarios where the vendor has charged state sales tax but missed determination of taxes due at the local levels (county, city and special).