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Add a jurisdiction-issued credit balance to a return

This article applies to:AvaTax

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.

Before you begin

  • Consider requesting a refund of the overpayment.
    When you receive a notification stating that the jurisdiction has a credit balance on your Sales and Use Tax account that is due back to you, contact the jurisdiction to request a refund of the overpayment. This is often the best option, because the jurisdiction communicates the refund timeline and it's easier to track the balance.
  • You may use any approved balance as payment towards a future return. 
    It is recommended to verify if 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 your responsibility 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 a payment for the December return, you can perform the ollowing steps to add the credit on your return between January 1st through January 10th, during your reconciliation period.

Steps

  1. In Managed Returns, go to Returns > Approve returns.
  2. Find the region where you want to adjust liabilities, and click Show details.
  3. Find the return you want to adjust, and then click the adjacent Ellipses (...) button and select Details and adjustments
  4. Click Add an adjustment and select the Jurisdiction Issued Credit option from the drop-down list. 
    Enter the jurisdiction issued credit amount as a negative figure.
    • 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.
    • 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.
    • To add an adjustment, you must have a written notice regarding the credit balance.
    • Some jurisdictions require advance notice for using a credit balance as payment towards a filing. Failure to notify the jurisdiction in advance can result in penalties and interest. If you're adding a credit balance in any of these jurisdictions, make sure to contact the jurisdiction before Avalara files the return:

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