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

Overview

You have an overpayment on your Sales and Use Tax account with a 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

Request a refund from the jurisdiction

When you receive notification that the jurisdiction has a credit balance on your Sales and Use Tax account that is due back to you, you may request a refund directly from the jurisdiction. This is the suggested method as it will be easier to track that balance and the timeline needed to provide that refund to you. Most jurisdictions will follow this process but please note, for some jurisdictions, the only method available is to provide a refund of the overpayment and will require you to reach out to the jurisdiction directly to initiate that process. There are also some scenarios that don't allow Avalara to utilize a credit as payment towards your return due to the limitations of a jurisdiction's filing website or filing processes. Those jurisdictions are:

Add an adjustment in AvaTax 

You may use any approved balance as payment towards a future return. We encourage you to verify any credit balances are still valid, available for use on future returns, and have received approval from the jurisdiction(s) to use the credit balance as payment before your returns are approved on the 10th of each month. If the state disallows the use of the credit on a return, any required amendments, associated penalties, and interest, and additional balances due would be the responsibility of your organization to resolve directly with the jurisdiction. To utilize a state-approved credit balance to reduce the amount due on your return, add the credit amount in the Tax Details and Adjustments section of your return.

Please note that these credits can only be added in AvaTax for the period you intend to apply them to. For example, if you are looking to apply a credit balance as payment for the December return, you can follow the steps below to add the credit on your return between January 1st through January 10th, during your reconciliation period.

  1. Once logged into your AvaTax account, navigate to Returns > Approve Returns. Find the region where you want to adjust tax liabilities and then select Manage Returns. 
  2. Find the return you want to adjust and then select Tax Details and Adjustments.
  3. Select Add Adjustments and enter the Jurisdiction Issued Credit amount as a negative figure.

This feature is currently only enabled for the following forms, but we are working to add it to more forms that allow this functionality:

  • Canada
    • British Columbia
      • BC
    • Manitoba
      • MB 2234
    • Saskatchewan
      • SK
  • United States
    • Alabama
      • AL 2100
      • AL 2105
      • AL 2410
      • AL 2610
      • AL 2620
      • AL 2630
      • AL 9501
    • Alaska
      • AK RSR
      • AK DILLINGHAM
      • AK DILLINGHAM10
      • AK HAINES
      • AK HOONAH
      • AK HOUSTON
      • AK JUNEAUCOMBINED
      • AK KENAI
      • AK KOTZEBUE
      • AK SITKAA
      • AK SITKAQU
      • AK TOGIAK
      • AK UNALAKLEET
      • AK UNALASKAQ
      • AK WASILLA
    • California
      • CA CDFTA401A2
      • CA CDTFA401A2 OUTLET
    • Colorado
      • CO DR0100
      • CO DR0100 Consolidated
      • CO DR0173
      • CO DR0252
    • Connecticut
      • CT OS114
    • Florida
      • FL DR15
      • FL DR15 Consolidated
    • Georgia
      • GA ST3OUTLET
      • GA ST3SALES
    • Idaho
      • ID 850
    • Illinois
      • IL ST1
      • IL ST1ST2
    • Iowa
      • IA 32022
      • IA WORKSHEETCU
    • Kansas
      • KS CT10U
      • KS CT9U
      • KS ST16
      • KS ST36
    • Kentucky
      • KY 51A102
      • KY 51A103
    • Maine
      • ME ST7
      • ME ST7B
      • ME ST7U
    • Massachusetts
      • MA ST9
    • Michigan
      • MI 5080SU
    • Mississippi
      • MS 72010
      • MS 72110015
    • Missouri
      • MO 531
      • MO 53C
      • MO 53V
    • Nebraska
      • NE FORM10COMBINED
    • Nevada
      • NV TXR01
      • NV TXR02
    • New Jersey
      • NJ ST50
    • New Mexico
      • NM TRD41412
      • NM TRD41413
    • New York
      • NY ST100
      • NY ST101
      • NY ST810
    • North Carolina
      • NC E500E536
    • Ohio
      • OH UST1
    • Oklahoma
      • OK SCU2000420041
      • OK STS2000220021
      • OK SVU2000520051
    • Pennsylvania
      • PA PA3R
    • Puerto Rico
      • PR PUERTORICO
    • Rhode Island
      • RI T-204R-Annual
        RI T-205
    • South Dakota
      • SD RVSTRTNMTS
    • Tennessee
      • TN SLS450
      • TN SLS450 Consolidated
    • Texas
      • TX 011140111501116
      • TX 0111401116
    • Utah
      • UT TC62MULTILOCATION
    • Virginia
      • VA ST7
      • VA ST8
      • VA ST9
    • Washington
      • WA BOCOMBINED
      • WA MULTIPURPOSEST
    • West Virginia
      • WV CST200CU
    • Wyoming
      • WY F41
      • WY F421
      • WY F43

NOTES: 

  1. The credit amount entered must not exceed the total tax liability after the discount. For example, if your tax liability is $100 and your discount is $10, the amount of the jurisdiction issued credit can be a maximum of $90.
  2. The credit amount can only be applied to tax liability due on a return. Credit amounts cannot apply to prepayments or items unrelated to Sales and Use tax calculations such as B&O tax and Litter tax.
  3. To add an adjustment, you must have a written notice regarding the credit balance.

Formal request required 

It is important to note that some jurisdictions require approval for using a credit balance as payment towards a filing. This is so they can move the credit to the appropriate period. Those jurisdictions are:

If you are planning to add your credit balance in AvaTax as an adjustment, or need Avalara to document the credit internally, please make sure to call the jurisdiction before reporting the credit to Avalara so they can make the appropriate changes. If this process is not completed and a credit is used on a return, you may be charged penalties and interest. If the credit balance would apply to multiple periods, this process will have to be completed for every period you would like the credit to be used in.