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Calculate Consumer Use Tax on Vendor Invoices in Microsoft Dynamics 365 for Finance and Operations

Calculate and verify use tax if a vendor hasn’t charged any tax.

Before you calculate consumer use tax...

Calculate consumer use tax for a vendor invoice

  1. After creating an invoice, go to ... > Avalara > Use Tax and click Use tax Assessment. Messages display showing the difference between the tax the vendor charged and the tax AvaTax Update calculated. When posting a transaction:
    1. If auto accrue undercharged tax is set to "no," messages are displayed showing the difference between the tax the vendor charged and the tax AvaTax Update calculated. If the vendor charged less than the amount AvaTax Update calculated, and the amount is not within the threshold amount indicated in your settings, you need to decide whether to accrue that amount.
      • If you don't want to accrue consumer use tax for the invoice, click No.
      • If you want to accrue consumer use tax for the invoice, click Yes. After you click Yes, the consumer use tax is calculated for the transaction and posted to AvaTax Update and the associated general ledger accounts.
    2. If auto accrue undercharged tax is set to "yes," the amount outside the threshold indicated in your settings automatically accrues and posts to your general ledger.

Add vendor charged sales tax to a vendor invoice

  1. On a vendor invoice, go to Financials > Tax, and then click Sales Tax.
  2. On the Sales tax transactions page, go to the Adjustment tab:
    1. Enter the tax amount the vendor charged in the Actual sales tax amount field, and then click Apply actual amounts.
    2. The total tax that AvaTax Update calculated displays in the Total calculated sales tax amount field, and the sales tax amount the vendor paid is displayed in the Total actual sales tax amount field. If these look correct, click OK.
  3. When posting a transaction:
    1. If auto accrue undercharged tax is set to "no," messages are displayed showing the difference between the tax the vendor charged and the tax AvaTax Update calculated. If the vendor charged less than the amount AvaTax Update calculated, and the amount is not within the threshold amount indicated in your settings, you need to decide whether to accrue that amount.
      • If you don't want to accrue consumer use tax for the invoice, click No.
      • If you want to accrue consumer use tax for the invoice, click Yes. After you click Yes, the consumer use tax is calculated for the transaction and posted to AvaTax Update and the associated general ledger accounts.
    2. If auto accrue undercharged tax is set to "yes," the amount outside the threshold indicated in your settings automatically accrues and posts to your general ledger.