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What is taxable measure and how is it calculated?

Overview

You want to know what taxable measure is and how it is calculated in Avalara AvaTax for Communications Manager. 

Environment

Avalara AvaTax for Communications Manager

Resolution

  • Taxable measure is the sum of taxable invoice amount plus any taxes that are also subject to tax.

To calculate the taxes in this example, we must understand taxable measure.

Taxable Measure.png

  1. Start with the invoice amount:  $100
  2. Calculate the Tax Amount for each Tax Type.
  • FCC Regulatory Fee (VoIP) 

Invoice Amount - Exempt Sale Amount* + Taxable Taxes = Taxable Measure

100 - 35.10 + 0 = 64.90

Taxable Measure  x Rate = Tax Amount

64.90 x 0.00291 = 0.188859

*The exemption amount is calculated from a Safe Harbor taxable amount multiplier.​​​​​​​

  • FUSF (VoIP) 

Invoice Amount - Exempt Sale Amount* + Taxable Taxes = Taxable Measure

100 - 35.10 + 0 = 64.90

Taxable Measure  x Rate = Tax Amount

64.90 x 0.201 = 13.0049

*The exemption amount is calculated from a Safe Harbor taxable amount multiplier.​​​​​​​

  • North Carolina Telecommunications Sales Tax

        Invoice Amount - Exempt Sale Amount + Taxable Taxes (in this case, the Federal Tax Amounts) = Taxable Measure

100 - 0 + (0.188859 + 13.0449) = 113.233759

Taxable Measure  x Rate = Tax Amount

113.233759 x 0.07 = 21.1601