In some states and provinces there are items which when purchased, the tax from that item a business may deduct from their tax liability. Does Avalara keep track of recoverable vs non recoverable tax?
As Avatax only really keeps track of Accounts Receivable transactions in the integration. Thus we do keep track of whether a tax is recoverable or nonrecoverable because the tax on Accounts Payable purchases do not factor into the tax calculation. This is different from Consumer's Use Tax which is the amount of tax you pay on items purchased with exemption that are later consumed by your company.
You can manually enter transactions in the admin console to credit any recoverable tax, but it is not something that is automatically tracked by the Avatax service. You would need to determine your recoverable tax on your end, and enter adjustment transactions manually.