Sales Tax Calculation

In MYOB Acumatica, you can set up sales tax calculations for AR documents, sales orders, and pro forma invoices using the Avalara AvaTax service. This topic provides an overview of the supported document types, key configuration steps, and important details related to the tax calculation process.

Overview of Steps for Configuring Sales Tax Calculations

In MYOB Acumatica, sales tax calculations can be performed by the Avalara AvaTax service for the following AR documents:

Documents of the Invoice, Credit Memo, Debit Memo types created on the Invoices and Memos (AR301000).
Documents of the Invoice, Credit Memo, Debit Memo, Cash Sale, Cash Return types created on the Invoices (SO303000) form.
Sales orders created on the Sales Orders (SO301000) form.
Pro forma invoices created on the Pro Forma Invoices (PM307000) form.

To initiate the tax calculation process for a document in MYOB Acumatica, you need to complete the following configuration tasks:

Configure an external tax provider on the Tax Providers (TX102000) form.
Create a dedicated tax zone on the Tax Zones (TX206000) form with the following settings:
- The External Tax Provider check box is selected.
- The Sales Taxes option is specified in the Calculate in AP box.
Specify the tax zone either directly in the document or in the customer settings, so it is automatically applied to the document.
Assign tax categories to the relevant line items, either directly in the document or in the stock or non-stock item settings, so the system automatically copies them into the document settings.

When a document is saved and removed from hold in MYOB Acumatica, the system sends a request to the Avalara AvaTax service. The AvaTax service responds with the applicable tax information, including tax IDs, tax rates, tax amounts, and taxable amounts. This information is added on the Taxes tab of the document form. The total tax amount is calculated and shown in the Summary area of the document. At the same time, the applied taxes are added to the Taxes (TX205000) form.

Tax Calculation Approaches

In MYOB Acumatica, you can perform tax calculations in documents by using the following approaches:

Individually: Tax calculations is performed directly on document entry forms, such as Invoices and Memos (AR301000) or the Invoices (SO303000) form. Taxes are calculated for each document individually as it is entered or updated.
In bulk, on schedule: Taxes are calculated in bulk on the Calculate Taxes (AP501600), Calculate Taxes (CA501600), or Calculate Taxes (AR501600) forms. These forms display documents of specific types where taxes have not yet been calculated. AvaTax processes these documents sequentially, calculating the taxes and returning the corresponding tax IDs and tax amounts for each document. On these forms, you can set up an automation schedule so that taxes in documents are calculated automatically according to the schedule.

Attention:

Taxes are calculated on sales orders on the Sales Orders (SO301000) form only for informational purposes. Only taxes on invoices are actually reported.

Address Verification for Tax Calculation in Invoices

For sales tax calculation on an invoice, MYOB Acumatica sends the document amount and address information to Avalara, including the sender's address (the Address From field in the Avalara account) and the recipient's address (the Address To filed in the Avalara account). The system determines these addresses as follows:

Address From is typically the address of the branch specified in the invoice in the Branch box on the Financial tab of the Invoices and Memos (AR301000) form. If you're using the Service Management functionality and the invoice is created from a service order or appointment, Address From is the address of the warehouse specified for the line item, or the branch location address of the service order (if no warehouse is applicable). Although this address does not affect the sales tax calculation, it is required by the Avalara API. For Credit Memo or Cash Return documents, MYOB Acumatica sends the customer's location address as Address From.

Address To directly affects tax calculation. MYOB Acumatica uses different address sources depending on the specific document, as outlined in the table below, when sending information to Avalara for tax calculation.


Document	Address To
An AR invoice created on the Invoices and Memos form, including an invoice that refers to a project (but excluding an invoice that refers to a service order or appointment)	The main contact address that is specified for the customer account on the General tab of the Customers (AR303000) form
An AR invoice created on the Invoices and Memos form if the invoice has been generated for a service order or appointment	The address specified in the Address section on the Settings tab of the Service Orders (FS300100) form for the related service order
An AR invoice created on the Invoices and Memos form, for lines that were added to the invoice on this form and for lines that do not have an associated shipment reference number	The address of the customer location that is specified for the invoice in the Location box in the Summary area of the Invoices and Memos form and that is also displayed in the Ship-To Address section of the Addresses tab of this form
A document with the Invoice, Cash Sale, or Debit Memo type created on the Invoices (SO303000) form, with lines added directly on this form	The address of the customer location that is specified for the document in the Location box in the Summary area of the Invoices form and that is also displayed in the Ship-To Address section of the Addresses tab of this form
A pro forma invoice created on the Pro Forma Invoices (PM307000) form, with lines added directly on this form	The address of the customer location that is specified for the document in the Location box in the Summary area of the Pro Forma Invoices form and that is also displayed in the Ship-To Address section of the Addresses tab of this form

If you need the system to use different logic in retrieving Address To for sales tax calculation in documents, you can override the appropriate method through customization of MYOB Acumatica.

Line-Level Tax Calculation in AR Invoices

In the Accounts Receivable invoices, when the Pay by Line check box is selected in the Summary area of the Invoices and Memos (AR301000) form, the taxes calculated by the Avalara AvaTax service are distributed across the line items on release of the document and shown in the Tax Amount column on the Details tab of the Invoices and Memos form. The tax amounts are included in the balance of each respective line item and shown in the Balance column on the Details tab.

This functionality is available only if the Payment Application by Line feature is enabled on the Enable/Disable Features (CS100000) form.

Modification of Committed Invoices

Once an invoice has been saved in MYOB Acumatica, with taxes calculated by the Avalara AvaTax service and the invoice committed in Avalara, no further changes can be made to that invoice. Invoices with the Committed status in the Avalara account cannot be updated in MYOB Acumatica. Any changes that would trigger a tax recalculation, such as modifications to the date, address, or amount, cannot be saved, and, as a result, the invoice cannot be released.

Incomplete Invoice Processing

If any errors occur during tax calculation on the Invoices (SO303000) form, and either of the following conditions are met, the invoice is assigned the Incomplete status:

The invoice has been created through the Process Orders (SO501000) or Process Shipments (SO503000) form.
The invoice has been created through the Shipments (SO302000) form.

If an invoice is assigned the Incomplete status, taxes are not calculated, and payments applied to related sales orders are not transferred to the invoice.

To process an Incomplete invoice, on the Invoices form, you click the only available Complete Processing command on the More menu. When you click this command, the system recalculates the taxes and transfers payments from the related sales orders to the invoice (if no errors occur during the process).

You can also process multiple incomplete invoices on the Process Invoices and Memos (SO505000) form. In the Action box of the Selection area, you select the Complete Processing action and initiate the process. Once selected, all invoices with the Incomplete status will be listed in the table.