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Verify Vendor-charged Tax and Assess Consumer Use Tax in NetSuite

This article applies to:Avalara AvaTax for NetSuite

AvaTax Update calculates consumer use tax on purchase invoices or purchase transactions. Some business applications require you to enable consumer use tax calculation in their configuration, but you don't have to do so in AvaTax Update. To add or import consumer use tax to transactions in AvaTax Update, see add or import consumer use tax. To learn about the differences between tax types, watch the following video: Sales tax basics: Sales tax versus sellers use tax versus consumer use tax.

Verify vendor-charged tax and assess consumer use tax on a payable transaction entry

When you enable consumer use tax calculation, AvaTax Update calculates consumer use tax for transactions and the difference between the amount calculated by AvaTax Update calculated & the vendor-paid tax displays. On approval, the consumer use tax calculated by AvaTax Update is posted to NetSuite in the accrual field.

To calculate consumer use tax in real-time:

  1. In AvaTax Update for NetSuite, go to Transactions > Payables > Enter Bills, and enter the details of a bill.

  2. Add the item you selected in Item for Tax Paid to Vendor. The item amount is treated as the vendor-paid sales tax and used to compare to the tax calculated by AvaTax Update.
  3. Click Verify Tax. The use tax details for the bill calculate and display. 
    • If the amount of tax the vendor charged matches what AvaTax Update calculated, the accrual amount is 0.
    • If the amount of tax the vendor charged is greater than what AvaTax Update calculated, the vendor may have overcharged you tax.
  4. If you click OK, the accrual amount is posted in the GL accounts selected in your configuration. 
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