Calculating Tax for an AP Voucher Using Avalara AvaTax

If tax calculation using Avalara AvaTax is enabled in your org, you can calculate tax for an AP voucher.

Note:

If you calculated tax for a purchase order before creating the AP voucher lines, the tax fields are not copied from the purchase order line items.

Tax is calculated for each AP voucher line that has a quantity greater than zero and is not of type "Tax". You can optionally provide a specific Avalara tax code for every line to calculate tax with greater precision, depending on the product being shipped. You can do this manually, or rely on the mappings created by your administrator. If an Avalara tax code is not provided for a line, Avalara AvaTax uses the origin and destination addresses to calculate tax. For more information, see AvaTax Code to Product Group Mappings.

If you provide an exemption reason for an AP voucher line in the Use Code field, the line is recorded in Avalara AvaTax, but tax is not calculated for it.

When calculating tax, the origin address is set to the mailing address of the supplier site of the related purchase order. The destination address is determined from the related purchase order as follows:

  • If the Drop Ship field is selected for the purchase order, the drop ship address of the purchase order is used.
  • If the Override Ship to Address is populated on the purchase order, the customer address record is used.
  • If the Procured for field is populated on the purchase order, the shipping address of the customer account is used.
  • If the Ship to Warehouse field is populated on the purchase order, the address of the warehouse is used.

If the items on a purchase order line are shipped to a different warehouse than the one specified for the purchase order, the address of the line's warehouse is used as the destination address for the AP voucher line. Similarly, if the Drop Ship field is selected for a purchase order line item, the drop ship address of the line is used. This ensures that the relevant tax is applied for each AP voucher line.

For a full description of the values sent from an AP voucher to Avalara, see AP Voucher to Avalara AvaTax Mappings.

You can calculate tax for an AP voucher in several ways:

  • Manually, by clicking Calculate Tax on the AP voucher record page. For more information, see Calculating Tax for a Single AP Voucher.
  • Automatically, when you match the AP voucher. For more information, contact your administrator.
  • Automatically, when a checkbox or a formula checkbox is selected on the AP voucher. The field is configured by your administrator. For more information, contact your administrator.

After tax is calculated, the relevant tax rate, value, and name fields are automatically populated on each line. This enables you to view a breakdown by jurisdiction, for up to three jurisdictions. The Tax and Tax Rate fields contain the total values for the line.

In addition, a new line of type "Tax" is created. The Extended Price field of this line contains the total tax for all the AP voucher lines. Each time you recalculate tax for an AP voucher, the tax line is replaced by a new one.

The Total Tax field on the AP voucher also enables you to easily view the total amount of tax for all lines. The External Tax Status is set to "Calculated". The External Tax Transaction ID and External Tax Status Last Updated fields are also updated.

Calculating Tax for a Single AP Voucher

You can only calculate tax for an AP voucher credit once it has been matched.

Warning:

This action deletes any existing lines of type "Tax" and creates a new tax line. This cannot be undone.

To calculate tax for a single AP voucher using Avalara AvaTax:

  1. Open the AP voucher that you want to calculate tax for.
  2. Click Calculate Tax.
  3. Click Calculate Tax to confirm the action.