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Determine Taxes

This guide helps you use the features of the Tax Determination section of the Customer Portal so you can make accurate and informed tax calculations.

This guide helps you use the features of the Tax Determination section of the Customer Portal so you can make accurate and informed tax calculations.

Tax Determination provides a window into the Avalara for Communications tax engine. 

TaxDetTabsinRedSquare.png

Select this tab under Tax Determination...  ...If you want to...
AFC Viewer  Calculate taxes for a specific jurisdiction and transaction.
Tax Rates View tax rates for a specific jurisdiction.
Tax Logic Discover how rates are calculated within a jurisdiction.
Taxability Look up valid tax types for transactions in specific jurisdictions.

Calculate taxes for transactions

To calculate taxes for a transaction, do the following:

  • From Tax Determination in the Customer Portal, click the AFC Viewer tab. You will need to fill in the appropriate sections.
  • Click Calculate to see the results.
  • If desired, export the results. 

The detailed steps for filling in the fields are shown here.

  1. Select the customer profile for the transaction you want to calculate taxes for. 
     
  2. Fill in the Date field for the calculation as follows:
    Field Description
    Date

    Pre-populates to the current date and provides the ability to select the transaction date (month, day and year) by clicking on the calendar icon in the field.  

    Note:  AFC Customer Portal compares the entered date to the effective date of each tax that applies to the transaction.  If the date passed to AFC Customer Portal is "equal to" or "greater than" the effective tax date, the current tax rate is used.  Historical rates and effective dates are maintained and updated within the AvaTax for Communication engine and correct tax information is returned based upon the transaction date.  

  3. Click Select Jurisdiction to expand the section. Note that you must expand the Origination and Termination sections to see the fields. The Origination and Termination sections represent where the transaction began and ended; they need to be completed only if different from the Bill To jurisdiction.

    Fill in the fields as follows.

    Field or Checkbox Description
    Country Bill To, Originating, or Terminating country for taxing jurisdiction.
    State/Province  Bill To, Originating, or Terminating state/province for taxing jurisdiction.
    County Bill To, Originating, or Terminating county for taxing jurisdiction.
    City Bill To, Originating, or Terminating city for taxing jurisdiction.
    Zip/Postal Code Bill To, Originating, or Terminating zip/postal code for taxing jurisdiction.
    Ext Postal Code Extension for Bill To, Originating, or Terminating zip/postal code for taxing jurisdiction.
    PCode Code Avalara assigns to identify the geographic boundaries for the taxing jurisdiction. 
    FIPS 10-digit Federal Information Processing Standards (FIPS) code to define the taxing jurisdiction.
    NPANXX 6-digit North America Numbering Plan Area – Local Exchange (NPA-NXX) code to define the taxing jurisdiction.  
    Show All Locations Used to override any individual preferences which have been selected and saved to each user account. Check this box to allow all options in the input fields to appear in drop-downs.    
  4. Click Select Transaction to expand the section and see all of the fields.  
    1. To display a Transaction/Service Type pair, make a selection in T/S Type Search or select Transaction Type and Service Type separately. Note that you can bypass your preference settings if you check the box Show all T/S Types.
    2. Make other selections as appropriate for the T/S Pair: 
    Field or Column Description
    Charge Amount Specifies the sale price of the transaction to be taxed. The amount should always be positive or 0. This field defaults to 100.00
    Lines (if applicable) Represents the number of phone lines sold to the customer and defaults to 1. VoIP and Local service accounts should include a transaction for VoIP/Lines or Local/Lines, which identify the number of phone lines sold to that customer. AFC Customer Portal uses this information for generation of per line taxes (frequently local E911 charges and state telecommunications relay service fees).
    Minutes (if applicable) Specifies the duration of usage-based communications services; defaults to 10.00. For the generation of taxes that are specified as per minute fees in some taxing jurisdictions. The value should be expressed in decimal format; for example, 20 minutes and 30 seconds would be 20.5 minutes.
    Show all T/S Types (Igonore Preferences) Bypasses your display preferences and lists all Transaction/Service types.
  5. (Optional) Under Select Transaction, expand the section Advanced Configuration

The fields you enter are figured into the calculation:
 

Field or Checkbox Description
Customer Type

Defines the person or entity purchasing the transaction. Tax implications vary for different categories of purchasers based on location and situation. The Customer Type value options are:

Business - transactions made by a commercial business. Defaults to this value.

Residential - transactions made by consumers for home use.

Industrial - transactions made at a qualified industrial business. 

Senior Citizen - transactions made by a customer qualified as a senior citizen in their jurisdiction.

Service Class Used to delineate the primary activity of an organization as either selling Long Distance or Local Service, which impacts tax application in some jurisdictions. The default value is set to Primary Local.
Business Class Specifies if the business making the transaction is an Incumbent Local Exchange Company (ILEC) or a Competitive Local Exchange Company (CLEC). The default value is set to CLEC.
Sale Type Allows you to specify whether the transaction is a retail sale to an end user or a wholesale transaction with another seller. Retail specifies that the transaction is a sale to an end user. The default value is RetailWholesale specifies that the transaction is a sale to another seller, who will resell the service to an end user or another party.
Incorporated Indicates whether the customer involved in this transaction is inside or outside an incorporated area designated as their location. The default value is pre-populated.
Prepaid Identifies pay-as-you-go prepaid communications usage. The prepaid input is used to account for the impact of point-of-sale tax treatment in relevant states. The Communications Customer Portal assumes that all transactions are postpaid.
Lifeline Indicates whether the customer is a lifeline recipient and thus subject to special tax considerations.
Facilities Indicates whether the seller is utilizing their own tangible communications infrastructure to deliver the services represented by the transaction. If the carrier delivering the service has company-owned facilities used to provide the service, then they are considered facilities-based.
Franchise Indicates whether the company provides services sold pursuant to a franchise agreement between the carrier and jurisdiction.
Regulated Indicates whether the telecommunication company and its services are regulated by the public utility authorities in the state of the service. The default value is pre-populated.
Invoice Mode Allows you to group multiple line items into a single invoice. When checked, tax engine applies any tax brackets or limits per invoice rather than per line item. 
Tax Inclusive Enables tax-inclusive calculations. Accepts the transaction data and performs a reverse tax calculation in order to arrive at the base sale amount and taxes for the desired total charge.
Pro-Rated Enables you to calculate taxes per line and fixed taxes on a prorated basis when appropriate. Enter the percentage of the month the purchaser used the service. The prorate function checks the conditions of each tax in the appropriate jurisdiction to determine if prorating is allowed. If prorating is not allowed, the full amount is taxed. If proration is allowed, the tax will be returned in an amount reduced by the supplied percentage.
Adjustment Enables you to provide for an adjustment activity such as discounts, refunds, changing a customer’s bill, or writing off uncollectible accounts. Select an Adjustment Method and/or a Discount. Note that various adjustment methods and discount options are available in the Avalara AvaTax for Communication product.

 

  1. Enter exemptions for the transactions that are triggered when conditions you specify are met. Expand Exemption Settings and then use one of the following methods:
    1. Search or select from the list of previously-saved exemptions and then click Upload.
    2. Add a new exemption by clicking +Add Exemption and then filling in the fields in the Exemption Settings window as follows. Save your added exemption. 
       
      Field or Checkbox Description
      Country Country for taxing jurisdiction for the exemption.
      State/Province  State/province for taxing jurisdiction for the exemption.
      County County for taxing jurisdiction for the exemption.
      City City for taxing jurisdiction for the exemption.
      Zip/Postal Code Zip/postal code for taxing jurisdiction for the exemption.
      Ext Postal Code Extension for Bill To, Originating, or Terminating zip/postal code for taxing jurisdiction.
      PCode Code Avalara assigns to identify the geographic boundaries for the taxing jurisdiction. 
      FIPS 10-digit Federal Information Processing Standards (FIPS) code to define the taxing jurisdiction.
      NPANXX 6-digit North America Numbering Plan Area – Local Exchange (NPA-NXX) code to define the taxing jurisdiction.  
      Show all locations Used to override any individual preferences which have been selected and saved to each user account.  Check this box to allow all options in the input fields to appear in drop-downs. 
      Exemption Type

      Used to trigger exemption of a particular Tax Type at a defined Tax Level for the current transaction. Choose an exemption type. 

      • Category - Indicates the Tax Category for the exemption. You must also select Exemption Level and Tax Category. 
      • Level - Indicates the Tax Level for the exemption. You must also select Tax Category. 
      • Specific - Indicates a narrowly-defined exemption that you specify. You must also select Exemption Level and Tax Type. 
      • Wholesale - Indicates a resale. No other selection is necessary.
      Exemption Level Level of exemption (federal, state, country or local). 
    3. Save the exemption for later use by adding it to Favorites.
      AddExemptiontoFavorites.png
  2. (Optional) Enter transactions/services to include in a bundle. (A bundle is a group of transactions that act as one sale.) The tax calculation takes into account the amount you allocate for each transaction in the bundle.

    Expand the section Bundler Settings and then use one of the following methods:
    1. Search or select from the list of previously-saved bundles and then click Upload.
    2. Add a new Bundle by clicking +Add Bundle and then fill in the fields for each transaction in the bundle. Save your added transaction. 

      AddBundle.png
       

      Field or Checkbox Description
      Percent (%) of Sale Indicates that each transaction in the bundle is to receive a percentage of the total sale amount. If you select Percent (%) of Sale, each transaction in the bundle must also be allocated this way. All transactions added together must reach 100%.
      Amount ($) of Sale Indicates that each transaction in the bundle is to receive a specific amount of the total sale. If you select Amount ($) of Sale, each transaction in the bundle must also be allocated this way.
      T/S Type Search County for taxing jurisdiction for the exemption.
      Transaction Type City for taxing jurisdiction for the exemption.
      Service Type Service Type to add to the bundle.
      Allocation

      For Percent of Sale transactions, enter a percentage (in decimal format; for example, enter .35 for 35%)

      For Amount ($) of Sale transactions, enter a dollar amount.

      Show all T/S Types (Igonore Preferences) Bypasses your display preferences and lists all Transaction/Service types.
    3. Save the bundle for later use by adding it to Favorites.
      SaveBundletoFavorites.png
  3. (Optional) To add a Federal TAM (Tax Adjustment Multiplier) in the calculation, expand the section. Click Add Fed TAM Override and fill add the information.
    1. Make a selection in Traffic Study Type.
    2. View the corresponding original TAM rate in the Federal TAM Original (%) field. You cannot modify this field. Enter the new rate in the Federal TAM Override (%) field in decimal format. (Example: Enter .35 for 35%).

View tax rates for a jurisdiction

 To view tax rates for a jurisdiction, do the following:

  • From Tax Determination in the Customer Portal, click the Tax Rates tab. 
  • Expand Select Jurisdiction and Select Settings. Fill in the appropriate jurisdiction details and settings.
  • Click Submit to see the table of results or, for large amounts of data, download the results.

The detailed steps for filling in the fields are shown here.

  1. Select the customer profile for the jurisdiction you want to calculate taxes for. 
  2. To add a jurisdiction, click +Add.
  3. Fill in the fields under Select Jurisdiction as follows:
    Field or Checkbox Description
    Country Country for taxing jurisdiction.
    State/Province  State/province for taxing jurisdiction.
    County County for taxing jurisdiction.
    City City for taxing jurisdiction.
    Zip/Postal Code Zip/postal code for taxing jurisdiction.
    Ext Postal Code Extension for Bill To, Originating, or Terminating zip/postal code for taxing jurisdiction.
    PCode Code Avalara assigns to identify the geographic boundaries for the taxing jurisdiction. 
    FIPS 10-digit Federal Information Processing Standards (FIPS) code to define the taxing jurisdiction.
    NPANXX 6-digit North America Numbering Plan Area – Local Exchange (NPA-NXX) code to define the taxing jurisdiction.  
    Show All Locations Used to override any individual preferences which have been selected and saved to each user account. Check this box to allow all options in the input fields to appear in drop-downs.    
  4. Under Select Settings, select a date that the rate would be in effect. 
  5.  Check Show Zero Rates to display rates that have a zero value. 
  6. Results are shown in tables that are separated by the levels you entered. For example, Federal, state/Province, and County are shown if you entered the federal, state, and county fields for the jurisdiction).

Export transactions 

To export the transactions that you calculated to an Excel file or PDF, do the following: 

  1. With the results displayed at the bottom of the Viewer page, select the format for the exported file. The menu is located next to the Export Transactions button.

    ExportTransactions.png
  2. Click Export Transactions. A Transactions Detail Report is downloaded to your desktop. 
  3. To retrieve the Transactions Detail Report later, go to Reporting in the Communications Customer Portal and click the Downloads tab. 

    Download.png
     

View tax logic 

 To understand how tax calculations are made for a jurisdiction and tax type, do the following:

  • From Tax Determination in the Customer Portal, click the Tax Logic tab. 
  • Expand Select Jurisdiction and Select Settings. Fill in the appropriate jurisdiction details and settings.
  • View or export the Tax Logic Report

The detailed steps for filling in the fields are shown here.

  1. Select the customer profile for the jurisdiction you want to calculate taxes for. 
  2. Under Select Jurisdiction, fill in the fields as follows:
    Field or Checkbox Description
    Country Country for taxing jurisdiction.
    State/Province  State/province for taxing jurisdiction.
    County County for taxing jurisdiction.
    City City for taxing jurisdiction.
    Zip/Postal Code Zip/postal code for taxing jurisdiction.
    Ext Postal Code Extension for Bill To, Originating, or Terminating zip/postal code for taxing jurisdiction.
    PCode Code Avalara assigns to identify the geographic boundaries for the taxing jurisdiction. 
    FIPS 10-digit Federal Information Processing Standards (FIPS) code to define the taxing jurisdiction.
    NPANXX 6-digit North America Numbering Plan Area – Local Exchange (NPA-NXX) code to define the taxing jurisdiction.  
    Show All Locations Used to override any individual preferences which have been selected and saved to each user account. Check this box to allow all options in the input fields to appear in drop-downs.    
  3. Under Select Settings:
    • Select the Effective Date (the date the rates are to be in effect).
    • Select the Tax Type (a description of the tax, related transaction/service pairs, and a list of all of the variables for the calculation, by category level). Be sure to use the scroll bar at the bottom of the display to see all the columns. (See the screenshot in the next bullet.)
    • To export the file to Excel, click the menu button and choose Excel

      TaxLogicReport.png

Taxability 

To find out whether certain transactions are taxable in a specific location, do the following:

  • From Tax Determination in the Customer Portal, click the Taxability tab. 
  • Expand Select Select Transaction/Service Type and Select Settings. Fill in the appropriate transaction/service type and settings.
  • Click Submit to see the results.

The detailed steps for filling in the fields are shown here.

  1. Select the customer profile for the jurisdiction you want to calculate taxes for. 
  2. To display a Transaction/Service Type pair, make a selection in T/S Type Search or select Transaction Type and Service Type separately. Note that you can bypass your preference settings if you check the box Show all T/S Types.
  3. Under Select Settings, fill in the fields as follows:
    Field or Checkbox Description
    Effective Date A date when the tax is in effect in the jurisdiction.
    Show Zero Rates Show as taxable even if the rate is zero.
    Show Repealed Taxes Show as taxable even if the tax has been repealed before the effective date.
    Show Alternate Locations Show all locations designated as alternates for this jurisdiction. For example, alternates in New York could be Manhattan and The Bronx. 
    Country Country for taxing jurisdiction.
    State/Province  State/province for taxing jurisdiction.
    County County for taxing jurisdiction.
    City County for taxing jurisdiction.

 

 

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