Use Tax Calculation

In MYOB Acumatica, use tax calculations can be performed by the Avalara AvaTax service in accounts payable bills and purchase orders. This topic provides an overview of the supported document types, along with key setup steps and important details about the process.

Overview of the Use Tax Calculation Setup

In MYOB Acumatica, the calculation of use taxes is performed in the following documents:

  • Documents of the Bill type created on the Bills and Adjustments (AP301000) form
  • Purchase orders of the Normal, Drop-Ship, and Project Drop-Ship types created on the Purchase Orders (PO301000) form
Attention: The taxes calculated in purchase orders on the Purchase Orders form are used for informational purposes. Only taxes calculated in AP bills are actually reported.

To initiate the use tax calculation in a document in MYOB Acumatica, the following configuration tasks must be completed:

  1. An external tax provider must be configured on the Tax Providers (TX102000) form.
  2. 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.
    • Use Taxes is specified in the Calculate in AP box.
  3. The tax zone must be specified either directly in the Vendor Tax Zone box on a document entry form or in the vendor's settings on the Vendors (AP303000) form.

When you save a document, MYOB Acumatica sends an API request to the Avalara AvaTax service. The service returns the applicable use taxes, which are added to the Taxes tab of the Bills and Adjustments or Purchase Orders form. The system also adds the applied taxes to the Taxes (TX205000) form.

As a result of use taxes being processed, a GL transaction is posted to the general ledger that debits the tax expense account and credits the accounts payable account with the amount specified in the Tax Amount column of the Taxes tab on the Bills and Adjustments form.
Important: The bill reclassification process does not send updated information about the general ledger accounts to the external tax provider. For more information, see Project Expense Reclassification: Limitations.

The following table lists the settings of the use taxes that are returned by the Avalara AvaTax service and added to the Taxes form of MYOB Acumatica.

UI Element Value
Tax ID The value from the taxName parameter in the API response + the USE suffix
Calculation Rule Exclusive Document-Level (read-only)
Description External Tax Provider State tax for followed by the jurisName value from the API response
Cash Discount Reduces Taxable Amount (read-only)
Tax Type Use (read-only)
Exclude from Tax-on-Tax Calculation Selected (read-only)
Tax Agency The value of the Tax Agency ID box specified on the Tax Zones form
Not Valid After Empty (read-only)
Partially Deductible VAT Cleared (read-only)
Reverse VAT Cleared (read-only)
Statistical VAT Cleared (read-only)
Include in VAT Exempt Total Cleared (read-only)
Include in VAT Taxable Total Cleared (read-only)
Pending VAT Cleared (read-only)
Direct-Entry Tax Cleared (read-only)
GL Accounts tab
Tax Payable Account The value specified in the Tax Payable Account box on the Tax Agency tab of the Vendors (AP303000) form
Tax Payable Subaccount (if applicable) The value specified in the Tax Payable Subaccount box on the Tax Agency tab of the Vendors form
Use Tax Expense Account Selected
Tax Expense Account The value specified in the Tax Expense Account box on the Tax Agency tab of the Vendors form
Tax Expense Subaccount (if applicable) The value specified in the Tax Expense Subaccount box on the Tax Agency tab of the Vendors form

Line-Level Tax Calculation in AP Bills

An accounts payable bill is paid by line when the Pay by Line check box is selected in the Summary area of the Bills and Adjustments (AP301000) form. In this case, the taxes calculated by the Avalara AvaTax service are distributed across the line items on release of the bill 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.