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How do I create a tax credit?


Tax was calculated on a transaction that was supposed to be non-taxable in a previous period. Now I need to refund the tax and create a tax credit. 


Avalara AvaTax 


  • The recommended best practice is to credit and rebill the transaction in the original period, then amend the return in the original period
  • Another option is to create a transaction that is a full return of the original transaction, including tax. 
    • If there is already an exemption applied to the customer you can override it by using entity use code "Taxable".
    • Use either a negative Quantity or Amount as return invoices do not automatically accrue negative liabilities.
  • Create a second transaction that has the same sales amount as the first, but tax exempt. 
  • Make both of these transactions in the current period, not the period which the original transaction was made. 
  • For information on how to add these transactions directly into the admin console please click Here.

Note: If the tax rate has changed you may need to use a tax date override when entering the transactions. 

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