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Reconcile scheduled returns with transactions in AvaTax Update

This article applies to:Avalara Returns

Occasionally, the taxes you see on your scheduled returns won't match the taxes calculated on AvaTax Update transactions. Whether you need to fix the discrepancy depends on the return. Sometimes, the difference is due to something harmless, like vendor discounts and carryover credits, but in other cases—like an incorrect return form—it might cause an inaccurate filing. 

To make sure you file accurate returns, reconcile your scheduled returns with AvaTax Update transactions.

Before you begin

Your returns need to be set up and then approved by Avalara.

Steps

  1. Generate a liability worksheet summary report:
    1. In AvaTax Update, go to Reports and click Liability & Tax Return Reports.
    2. Select Liability Worksheet Reports for the report category, and Tax Liability Worksheet State Summary for the report name.
    3. Fill out the report and click Generate Report.
  2. Generate a sales and use tax summary report: 
    1. In AvaTax Update, go to Reports and click Liability & Tax Return Reports.
    2. Select Sales & Sellers Use Tax Filing Report for the report category, and Sales and Sellers Use Tax Summary for the report name.
    3. Fill out the report and click Generate Report.
  3. Compare the two reports.
    The numbers in the Amount Due column in your liability worksheet summary report should equal the numbers for each corresponding state in the Tax Amount column of the sales and use tax summary report. If there are differences between these figures:
    1. Make sure you set up a return in the jurisdiction
      Returns always excludes taxes collected in jurisdictions where you haven't registered. As a result, one report may show tax owed while the other shows nothing due. Tax calculated from a region where you haven't set up a return isn't reported until you schedule a return there.
    2. Check the filing frequency
      Any return filed quarterly, semi-annually, or annually has additional sales tax a monthly report doesn't show. If Returns shows larger numbers than the reports do, this omission may be the cause of the discrepancy. In this case, run the sales and use tax summary report for the entire filing period instead of just a single month.
      Tip icon To check a return's filing frequency, go to Returns > Manage and Approve Returns and click Details next to the state you're checking.
    3. Look for vendor discounts and carryover credits
      The sales and use tax summary report doesn't capture some elements of your returns, including vendor discounts and credits that may be excluded from one period and applied in another. Check for discounts and credits if there are discrepancies between transactions in AvaTax Update and Returns that can't be explained by filing frequency or a lack of scheduled returns.
    4. Check whether the remittance value was rounded
      Sometimes Returns rounds remittance values up to be certain we're remitting enough tax. In these cases, the rounding difference becomes a carryover credit in the next month's returns.
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