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Avalara Help Center

How do I use a tax credit I have in a state?


You paid excess tax to a jurisdiction and now have a credit with that jurisdiction. Avalara files for you in this jurisdiction and you want to have this credit refunded


Avatax Returns


  • There are two options to utilize a credit on a state account.
    • Avalara can apply this credit towards future returns in that state until the credit it is used completely.
      • We would need a notice or documentation from the state that says a credit is due to you.
      • To have Avalara apply the credit toward your future returns, forward the notice or documentation of credit balance to
      • We can only apply a credit for a tax type that we are filing on behalf of your company. 
        • Examples:
          • If you have a credit for corporate tax, we cannot apply this to your sales tax return.
          • If you are filing sales tax but have a credit for sellers/vendors/retailers use tax, we cannot apply this credit.
    • You can contact that state/jurisdiction directly regarding a monetary refund.
      • Avalara is not involved in this process.
      • If you have a state credit with the following regions, please contact them directly for a refund as they cannot be processed on your return.
  • There are some instances where a state requires a formal request to use a state credit on a return.
    • This will place the credit in the period of your choosing.
    • If this process is not completed and a credit is used on a return, you may be charged penalties and interest.
    • The following states require a formal request to use a credit in a specific period:
    • Please make sure this process is completed before reporting the credit to Avalara as we cannot perform this action on behalf of your company.
    • If you have a credit that would apply to multiple periods, this process will have to be completed for every period you would like the credit to be used in.
    • The alternative would be request a refund from the jurisdiction.


Note: Once the state credits are verified as valid and can be applied to future returns, they will be entered into the applicable state worksheets on the 5th of each month for returns filed that cycle. If your liability changes, liability is added or removed, please contact Support to notify our Reconciliations team of this. Necessary adjustments will need to be made to the credit amount to make sure as much of the state credit is used as possible without creating a negative return.