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Calculate Sales Tax

As long as you enable tax calculation and select AvaTax as the tax calculation method in your accounting software, AvaTax automatically calculates a sales or use tax rate on a variety of transaction types according to the taxability rules of those products (exempt customers aren't charged sales tax). Some of the transaction types AvaTax calculates tax for are:

  • Estimates/quotes
  • Orders/invoices/cash sales
  • Return authorizations/credit memos/cash refunds

When you create one of these transaction types in your accounting software, AvaTax uses the customer's ship-to address to calculate the correct sales tax.

If you're applying discounts, remember:

  • A header-level discount is applied to all taxable items in the transaction
  • A line-level discount is applied to the item above the discount row
  • If both a header-level and a line-level discount are applied, their cumulative discount is applied to the line item

Calculate tax for a transaction

AvaTax for Microsoft Dynamics NAV calculates sales tax and posts the transactions in Microsoft Dynamics NAV for the following sales or credit transaction types:

  • Sales and service quotes, orders, invoices, and credit memos
  • Return orders
  • Posted sales and service invoices and credit memos
  • Blanket and return sales orders
  • Sales order shipping, sales order invoicing

To calculate tax on a transaction:

  1. In Microsoft Dynamics NAV, in the left pane, go to Departments > Sales & Marketing > Order Processing.
  2. In the right pane, under Lists, click a transaction type, and then click New.
  3. Create the transaction, including the following:
    • Fill in Location Code for the first line item. If you don't add a location code, the location code for the transaction is determined as follows:
      • If the line item doesn't have a location code, but there's a location code on the Shipping tab, the line item is assigned the location code from the Shipping tab.
      • If neither the line item nor the Shipping tab have a location code, but there's a location code in the responsibility center, the line item is assigned the location code from the responsibility center.
      • If the line item, Shipping tab, and responsibility center don't have location codes, but there's a location code for the company, the line item is assigned the company's location code.
      • If none of these have a location code, the company code is used as the location code.
    • To apply a discount, enter a value in Invoice Discount % or Invoice Discount Amount.
    • On the General tab, fill in External Document No. For an invoice, the External Document No in Microsoft Dynamics NAV displays in Purchase Order No in AvaTax.
    • On the Invoicing tab:
      • Select the appropriate Tax Area Code:
        • When your shipping and warehouse addresses are different, select AVATAX.
        • When your shipping address is the same as your warehouse address, select AVATAX-POD.
      • In Tax Registration No, enter your business identification number (BIN). Your BIN is used on transactions outside of North America.
    • To calculate sales tax based on the ship-to address, on the Shipping tab, select the Ship-to Code.
    • On the Prepayment tab:
      • If the transaction is a prepayment, enter Prepayment %.
      • To include the tax amount in the prepayment invoice or credit memo amount, select Prepmt Include Tax.
  4. Click OK. AvaTax automatically calculates the correct sales tax, based on how you configured AvaTax for Microsoft Dynamics NAV. AvaTax also posts a new committed document in AvaTax using the Microsoft Dynamics NAV transaction number as the document code.

Calculate tax for multiple transactions

To calculate tax for multiple transactions at once:

  1. In Microsoft Dynamics NAV, go to Departments > Avalara AvaTax > Utilities, and then click Tax Calculation Update Utility. The Tax Calculation Update Utility opens.
  2. For Module, select either Sales or Service, as appropriate for your transactions, and then add the following:
    • Transaction Type: Select the type of transaction you want AvaTax to process.
    • Start Date and End Date: Select the date range of the transactions you want AvaTax to process.
  3. Click Get Tax.
  4. To view the sales tax amount, go to the Tax Calculation Update Utility Results tab.

Calculate sales tax using latitude and longitude

If a customer has a location that has no street address, such as an oil-rig, drilling platform, or radio antenna, you can still calculate sales tax on that location using latitude and longitude.

To calculate sales tax using latitude and longitude:

  1. Create a new transaction.
  2. On the Navigate tab, click Latitude / Longitude. The Edit - AvaTax Transaction Latitude / Longitude dialog box opens.
  3. From the Address Type list, select the applicable address type, and then enter the latitude and longitude coordinates for the location in decimal format, and then click OK. (To convert coordinates in degrees/minutes/seconds format to decimal degrees format, try the FCC's latitude/longitude online converter.)
  4. Click Statistics, and then click Close.
  5. Click OK. The updated tax amount displays in the transaction.

Use a ship-to address to calculate tax

  1. In Microsoft Dynamics NAV, create a new transaction.
  2. In the New - [Transaction] dialog box, in the Shipping section, next to Ship-to Code, select a ship-to code for the transaction, and then click OK.

Override the sales tax date or amount on sales transactions

In AvaTax for Microsoft Dynamics NAV, you can override the sales tax date or amount after you change the override options on sales transactions.

To change override options and calculate tax on a sales transaction:

  1. In Microsoft Dynamics NAV, in the left pane, go to Departments > Sales & Marketing, and then click Order Processing.
  2. In the right pane, under Lists, click a transaction type, click New, and then create the sales transaction.
  3. To override the sales tax date at the header level (this date overrides the document date and is used to calculate the sales tax for all the lines in that transaction):
    1. Go to Actions > Avalara Functions > Tax Override.
    2. From Select Tax Override Type, select Date.
    3. Enter Tax Calculation Date, and then click OK.
  4. To override the sales tax date at the line level (this date overrides the document date added at the header-level and is used to calculate the sales tax for the indicated line in that transaction):
    1. On the Line tab, select the line you want to apply the override to, and then go to Avalara Functions > Tax Override.
    2. From Select Tax Override Type, select Date.
    3. Enter Tax Calculation Date, and then click OK.
  5. To override the sales tax amount:
    1. Go to Actions > Avalara Functions > Tax Override. This amount overrides the document sales tax amount for all the lines in that transaction.
    2. From Select Tax Override Type, select Amount.
    3. Enter Tax override Amount, and then click OK.

AvaTax calculates the correct sales tax, based on how you configure AvaTax for Microsoft Dynamics NAV. AvaTax also posts a new committed document in AvaTax using the Microsoft Dynamics NAV transaction number as the document code.

Adjust sales tax on credit memos

In AvaTax for Microsoft Dynamics NAV, you can only adjust sales tax on credit memos. Before you adjust sales tax on a credit memo, ensure the following for the memo you want to adjust:

  • Enable Tax Amount Adjustment is enabled
  • The amount to be credited is entered in the Tax Credit field

To adjust sales tax on credit memos:

  1. In Microsoft Dynamics NAV, in the left pane, go to Departments > Sales & Marketing, and then click Order Processing.
  2. In the right pane, under Lists, click a transaction type, and the click New.
  3. Create the transaction with a non-inventory item called SALESTAXADJUST with a line amount of the amount that you wish to adjust for this customer.
  4. Click Statistics, and then click Close.
  5. Click OK, and then, in the "Do you want to post the credit memo?" dialog box, click Yes. AvaTax automatically calculates the correct sales tax, based on how you configure AvaTax for Microsoft Dynamics NAV. AvaTax also posts a new committed document in AvaTax using the Microsoft Dynamics NAV transaction number as the document code.

View tax calculation details for a transaction

  1. In Microsoft Dynamics NAV, in the left pane, click Home, and then click the type of transaction you want to view.
  2. Open the transaction for which you want to view details.
  3. On the Microsoft Dynamics NAV toolbar, click Statistics.

Recalculate sales tax on sales transactions

  1. In Microsoft Dynamics NAV, in the left pane, go to Avalara Avatax > Utilities.
  2. In the right pane, go to Administration > Tax Calculation Update Utility.
  3. In the Edit - Tax Calculation Update Utility dialog box:
    1. For Module, select Sales.
    2. For Document Type, select the type of transaction for which you want to recalculate tax.
    3. To indicate a range of transactions to use, click Document No Filter, enter the number of the first transaction in the range, two periods (..), and then the number of the last transaction in the range (e.g.,type 1033..1092 to get transactions 1033 through 1092).
    4. To filter the transactions by date, fill in Document Start Date and Document End Date.
  4. In the Edit - Tax Calculation Update Utility dialog box, click Get Tax.
  5. To see the results of the tax recalculation, in the Edit - Tax Calculation Update Utility dialog box, click to expand Tax Calculation Update Utility Results.

Recalculate sales tax on service transactions

  1. In Microsoft Dynamics NAV, in the left pane, go to Avatax > Utilities.
  2. In the right pane, under Administration, click Tax Calculation Update Utility.
  3. In the Edit - Tax Calculation Update Utility dialog box:
    1. For Module, select Service.
    2. For Transaction Type, select the type of transaction for which you want to recalculate tax.
  4. To indicate a range of transactions to use, next to the transaction menu (Invoice in the screenshot below), type a transaction number, two periods (..), and then another transaction number (e.g.,SOI001033..SOI001092).
  5. To filter the transactions by date, fill in Document Start Date and Document End Date.
  6. In the Edit - Tax Calculation Update Utility dialog box, click Get Tax.
  7. To see the results of the tax recalculation, in the Edit - Tax Calculation Update Utility dialog box, click to expand Tax Calculation Update Utility Results.
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