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Credit AR Sales Tax Invoice

  • 16 November 2022
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dsimmerly
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Hello

I searched and surprised this question was not on the Community… maybe I am missing something

Using Avalara tax. Have a AR invoice that includes sales tax in error.  Need to create a credit memo for only the sales tax without having to credit the whole invoice.

Is this possible?

 

 

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Best answer by joshmclaughlin94 7 December 2022, 18:36

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Kandy Beatty
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Hi @dsimmerly 

How are you creating the Credit Memo? From the AR Invoices and Memos or from the Payments and Applications?

Kandy ~ If a member helped you, please *Like* their post, and if a member provided an answer to your question, please mark it as *Best Answer*.
MikeBasone
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I have the same question KBeatty21.

Can you please complete your reply post?

 

J
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When using Avalara, corrections to AR Documents including sales tax have rules. If the purpose of the Credit Memo is to cancel or modify tax, user will need to reverse the full amount of invoice. The correction document must have the same application amount when making API call to Avalara. If it doesn’t, system will return an error.

 

The recommended procedure is to reverse/correct invoice with sales tax, using Credit Memo with same application amount. This will ensure taxes on Credit Memo will be returned by Avalara consistent with original invoice, as meant to reverse the impact. After released/closed, user should create new invoice using accurate tax parameters. 

MikeBasone
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Thanks very much Josh for your response, very helpful.

 

dshillair23
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We have this same issue.  Ideally, we could use “Correct Invoice” but that doesn’t seem to re-calculate the taxes.

Do we need to perform the full credit workflow, including receiving the inventory back in and “re-shipping” to re-invoice correctly?  Why does the “Correct Invoice” functionality not work?

Appreciate any shared experience and solutions here.

josephaugello95
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When removing sales tax from an invoice that should not have had it, normally we would use the the “correct invoice” functionality.  This would allow us to change the customer tax zone from the Avalara tax zone to a non taxable tax zone.  However, our customer recently upgraded to 2022R2 22.209.0029 an that no longer seems to work because we get the following error.

 

Instead, we have found that we have to use the “cancel invoice” functionality instead. This allows us to credit our the original invoice and then go back to the original shipment and re-prepare the invoice.  Then we can update the customer tax zone on the new invoice and release it without getting this error.

I’m not sure if anyone else is experiencing this, but hopefully this helps someone that is having the same issue.

dshillair23
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With help from Crestwood Associates (our VAR), we’ve figured out a workflow for this.  As @josephaugello95 says above, you have to use Cancel Invoice.  However, before releasing the credit memo in Acumatica, we “Pause Exemption” for the customer in Avatax / ECM.  This forces Avatax to calculate the tax on the credit memo, so that it matches the original invoice in Acumatica and the tax liability is credited in Avatax.  Then, we “un-pause” the exemption, go back to the Shipment in Acumatica and prepare a new invoice, which is then released without tax.  Transactions then match in Acumatica and Avatax, and tax liability is correct.

 

Hope that helps.

tpaul
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How do you “Pause Exemption” in Avatax / ECM?  

dshillair23
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How do you “Pause Exemption” in Avatax / ECM?  

In the new Avatax ECM interface for certificates, if you click into the specific certificate, there is a button at the bottom to pause it.  See screenshot below:

 

tpaul
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Well, my screen for certificates does not look like that.  We must have a different version of ECM.  Thank you. 

dshillair23
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Well, my screen for certificates does not look like that.  We must have a different version of ECM.  Thank you. 

From the AvaTax home page, click the Exemptions menu, and click Customers.  This is the new ECM home for certificates, replacing CertCapture.

You should see a list of all your customers.  When you click on an individual customer, you will see their exemptions for each state.  

If you click on one of those certificates, you should see the screen I posted earlier.

 

I know Avalara has only recently made this change from CertCapture to ECM, so I’m not sure if it’s rolled out to everyone yet.

 

tpaul
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Found it.  Thank you sooooo much!  This will be a ton of help.  

J
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  1. One approach is to do a Credit Memo with two lines on it.  Doing it this way should update the state taxable sales and tax amount for Avalara without having to re-do the entire invoice. 
    1. The first line would have the Gross Sales Amount entered in “Ext Price” and would be marked as Tax Category = "TAXABLE".
    2. The second line would have a negative Gross Sales amount entered in “Ext Price” and would be marked as Tax Category = "NT" for non-taxable. 
    3. The end result should be that the gross sales of the two lines net each other out to zero and the balance of the credit memo would be the amount of the Sales Tax.
    4. Note this will not work if you have already fixed the customer to be an exempt customer.  The tax status on the customer will override the lines on a sales order, invoice or credit memo.
bjeter78
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Any suggestions on crediting the tax once processed through a credit card transaction?

Barbie Jeter

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