Sales Tax Calculation

In MYOB Acumatica, you can set up sales tax calculation for accounts receivable documents, sales orders, and pro forma invoices by 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.

Configuration of Sales Tax Calculations

Sales tax calculation can be performed by the Avalara AvaTax service for the following documents in MYOB Acumatica:

Documents of the Invoice, Credit Memo, and Debit Memo types created on the Invoices and Memos (AR301000) form
Documents of the Invoice, Credit Memo, Debit Memo, Cash Sale, and 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, the following configuration tasks must be completed:

An external tax provider must be configured on the Tax Providers (TX102000) form.
A dedicated tax zone must be created on the Tax Zones (TX206000) form. In addition to other tax zone settings, the following must be specified:
- The External Tax Provider check box is selected.
- Sales Taxes is specified in the Calculate in AP box.
The tax zone must be specified either directly in a document or in the customer’s settings.
For a sales order created on the Sales Orders form and invoice prepared for this order on the Invoices form, make sure that the Disable Automatic Tax Calculation check box is cleared on the Financial tab. If the check box is selected, MYOB Acumatica stops sending API requests to the Avalara AvaTax service.
The tax categories must be specified either directly in a document line or in the stock or non-stock item settings so that the system automatically copies them into the document settings.

When you save a document and remove it from hold in MYOB Acumatica, the system sends an API 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 to the Taxes tab of the document form. The total tax amount is shown in the Summary area of the document. The system also adds the applied taxes to the Taxes (TX205000) form.

Tax Calculation Approaches

In MYOB Acumatica, the calculation of taxes can be performed for one document individually or for multiple documents at the same time as described below:

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.
As a group and potentially on a schedule: Taxes are mass-calculated on the Calculate Taxes (AP501600), Calculate Taxes (CA501600), and 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 the 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 the Sales Tax Calculation

For sales tax calculation, MYOB Acumatica sends the document and address information to Avalara, including the sender's address (the shipFrom parameter in the API request) and the recipient's address (the shipTo parameter in the API request). The system determines these addresses as follows:

shipFrom 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 an appointment, shipFrom 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).
For Credit Memo or Cash Return documents, MYOB Acumatica sends the customer's location address as the shipFrom value.
Although this address does not affect the sales tax calculation, it is required by the Avalara API.
Important: If an invoice contains at least one line linked to a sales order with the Will Call check box selected on the Shipping tab of the Sales Orders (SO301000) form, the system will use the shipFrom address as the shipTo address for the document.

shipTo 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	`shipTo`
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 the shipTo value for sales tax calculation in documents, you can override the appropriate method through customization of MYOB Acumatica.

Line-Level Tax Calculation in AR Invoices

An accounts receivable invoice is paid by line when the Pay by Line check box is selected in the Summary area of the Invoices and Memos (AR301000) form. In this case, 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 form. The tax amounts are included in the balance of each 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 command on the More menu: Complete Processing. 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 Complete Processing, which causes all invoices with the Incomplete status to be listed in the table. You then initiate processing.