Skip to main content
Avalara Help Center

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

Overview

You paid excess tax to a jurisdiction causing a credit to be on file with that jurisdiction. Avalara files for you in this jurisdiction and you want to know what your options are to use the credit.

Environment

Avatax Returns

Resolution

  • 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.
        • If your notice or documentation indicates that you are receiving a refund, there is no need to send to Avalara as there is no pending action for us to take.
          • If you prefer to use the refund as a credit on a future return, please contact the jurisdiction as issuing a refund removes the credit balance from your account.
        • Please review Does Avalara research refund checks that were sent directly to me for further information on refunds from taxing jurisdictions.
      • To have Avalara apply the credit toward your future returns, forward the notice or documentation of credit balance to avataxreturns@avalara.com
      • We can only apply a credit for a tax type that we are filing on behalf of your company. 
        • Avalara only handles credits relates to Sales and Use tax.
          • If you have a credit in another tax type such as Franchise or Corporate taxes, please work directly with the state to resolve that matter.
        • Examples:
          • If you are filing sales tax but have a credit for sellers/vendors/retailers use tax, we cannot apply this credit.
          • If you have a credit for corporate tax, we cannot apply this to your sales tax return.
    • You can contact that state/jurisdiction directly regarding a monetary refund.
  • 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.
      • Avalara does not assist in this process.
      • If you need instructions on filling out the refund request form, please contact the jurisdiction directly.

 

Note: Once the state credits are received, 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.