Calculating Tax for a Credit Invoice Using Avalara AvaTax

If tax calculation using Avalara AvaTax is enabled in your org, you can calculate tax for a credit invoice.

Note:

When you credit or void an invoice, the tax values are not copied from the invoice line items to the credit invoice line items.

Tax is calculated for each credit invoice line that has a quantity greater than zero and is not of type "Tax". If an Avalara tax code is specified for the related invoice line item, Avalara AvaTax uses this code to calculate tax with greater precision, depending on the product being shipped. If an Avalara tax code is not provided for a line, Avalara AvaTax only uses the origin and destination addresses to calculate tax.

The origin address is determined from the warehouse of the sales order or service contract related to the original invoice as follows:

  • If the related warehouse contains an address, the address of the warehouse is used.
  • If the related warehouse does not contain an address, the address of the ICP related to the warehouse is used.
  • If a warehouse is not specified, the org address is used.

The ship-to fields of the original invoice are used as the destination address.

For a full description of the values sent from a credit invoice to Avalara, see Credit Invoice to Avalara Mappings.

You can calculate tax for a credit invoice in several ways:

  • Manually, by clicking Calculate Tax on the credit invoice record page. For more information, see Calculating Tax for a Single Credit Invoice.
  • Automatically, when you create the credit invoice by voiding or crediting an invoice. For more information, contact your administrator.
  • Automatically, when a checkbox or a formula checkbox is selected on the credit invoice. 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 Amount field of this line contains the total tax for all the credit invoice lines. Each time you recalculate tax for a credit invoice, the tax line is replaced by a new one.

The Total Tax field on the credit invoice 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 Credit Invoice

You can only calculate tax for a credit invoice once tax is committed for the original invoice.

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 credit invoice using Avalara AvaTax:

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