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Why is the freight tax code FR calculating tax on a credit when it was nontaxable on the invoice?

Overview

You are processing a credit for freight using the tax code FR and it is calculating tax when it wasn't on the invoice

Environment

Avalara Avatax

Resolution

  • FR is generally tax depends.
    • If your invoice has taxable items, then freight will be taxable.
    • If your invoice has nontaxable items, then freight will be nontaxable.
    • If your invoice has both taxable and nontaxable items, freight will be partially taxable.
    • If freight has a positive amount and there is another line with a negative amount, freight will calculate a positive tax.
  • When freight is the only item on the transaction or credit, the tax code FR will become taxable.
  • It is suggested to credit the whole invoice and re-bill without the freight.