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ACTION NEEDED: Unexpected Under-collections of local sales and use tax in select Texas jurisdictions 5/1/21 - 5/4/21

Overview

Avalara recently determined that between May 1, 2021 and May 4, 2021, transactions applied to addresses within the following list of jurisdictions in Texas may have returned an unexpected local sales or use tax rate. This may have resulted in an unexpected undercollection of up to 2%. On May 5, Avalara applied a retroactive fix which has repaired the rate discrepancy.

Jurisdictions Affected

  • Corpus Christi Crime Control (Nueces Co)
  • Cleveland
  • Draper Municipal Development District SP
  • The Woodlands-Twsp Econ. Dev Zone SP
  • Fort Worth
  • Houston
  • The Woodlands Township
  • Wimberley

Environment

AvaTax

Resolution

Please take these mitigation steps:

Identify affected transactions

Review your sales and use transactions for the Texas regions below from May 1, 2021 through May 4, 2021, to see which transactions calculated with an unexpected local sales or use tax rate. This may have resulted in an unexpected undercollection of up to 2%. 

Impacted Jurisdictions
Corpus Christi Crime Control (Nueces Co)
Cleveland
Draper Municipal Development District SP
The Woodlands-Twsp Econ. Dev Zone SP
Fort Worth
Houston
The Woodlands Township
Wimberley

To find affected transactions, review transactional data on the Transactions tab in AvaTax, or run a Tax Return - Sales and Sellers Use Tax Report.

You will need to complete this review and make any necessary changes on or before May 31, 2021.

Recalculate sales tax on the affected transactions

If you have affected transactions between May 1 and May 4, 2021, you may elect to rerun the transactions.

  1. In AvaTax, select the Transactions tab.
  2. Depending on the transactions you are looking for:
    • Select a date range by selecting dates in the From and To fields. 
    • Select filters to search by document status, document type, location code, and other criteria.
  3. Select the the transactions to recalculate, or select all filtered transactions by selecting the top check box. NOTE: Keep in mind that locked transactions can't be recalculated; any transactions included in filed returns must be credited and rebilled.
  4. Select Recalculate, then select Yes, Recalculate.
  5. When recalculation completes, select OK.

Note: If you choose not to recalculate tax due and report the tax charged and collected as is, you risk an unfavorable audit and additional tax assessment, plus potential penalties and interest in the future.

If needed, contact your tax professional for guidance on how to report the undercharged tax.