Using Avalara for Use Tax on Purchase Receipts

Overview

The Avalara integration allows you to calculate Use Tax on Purchase Receipts for out-of-state or tax-exempt vendor purchases. Use Tax is calculated and recorded automatically so tax liabilities can be reconciled accurately. Aspire calculates Use Tax through the Purchasing> Purchase Receipt workflow.

Things to know

• Use Tax applies when vendors do not collect Sales Tax and your business is responsible for tax based on where goods are received.

• Use Tax calculations do not change the Total on the Purchase Receipt. They record the accrued tax liability separately from the vendor payable amount.

• The Calculator icon allows you to preview tax before recording the transaction in Avalara.

Requirements

• To access the purchasing module, you need View Purchasing added to your user role.

• To calculate use tax on purchase receipts, you must have Add Receipt added to your user role.

• Ensure the vendor is marked as a Use Tax Vendor in their vendor profile. For more steps on updating your Vendors in Administration, read our Setting up the Avalara Integration article.

How it works

Use Tax calculation depends on vendor configuration and Ship To address information.

• When a vendor is marked as a Use Tax Vendor, both the vendor’s physical address (Ship From) and the receipt’s Ship To address are required.

• When you save a Purchase Receipt for a Use Tax Vendor, Aspire sends the transaction to Avalara to calculate tax.

• If tax was already partially charged by the vendor, enter the tax amount in the Extra Costs section. Avalara calculates any remaining tax owed after accounting for tax entered on the receipt.

• When line items are allocated to specific work tickets, Aspire calculates tax based on each Work Ticket’s Ship To address.

Note:

All statuses in Aspire for purchase receipts are for calculation purposes, only. Use Tax is applied to Avalara only when purchase receipts in Approved status.

Steps

Calculate Use Tax for your Inventory Location

Use these steps to calculate the tax liability for materials purchased from a Use Tax Vendor.

1. Go to Purchasing>Purchase Receipts and create a new purchase receipt.

2. Select a Use Tax Vendor from the dropdown list.

3. Enter your receipt details and line items.

4. If the vendor charged tax on the receipt, enter the amount in the Extra Costs section before calculating Use Tax. Avalara calculates any remaining tax owed after accounting for tax entered on the receipt.

5. Select the Calculator icon next to the Use Tax Total line. The Calculate Use Tax window will appear, and to proceed, select Calculate.

   • Aspire connects to Avalara to preview the tax based on the origin and destination addresses.

6. Review the Use Tax Total.

7. Select Save. Aspire creates the permanent tax transaction in Avalara and finalizes the receipt.

Allocate Use Tax across a single work ticket

If you are receiving materials that will be consumed across a work ticket location, you must allocate to the work ticket to accurately assess local tax rates.

1. On your purchase receipt, allocate the line items to the work ticket by entering information in the Ticket field. Aspire automatically fetches the specific Ship To address for the assigned work ticket.

2. Select the Calculator icon to calculate the Use Tax based on the work ticket location. Select Calculate.

3. Aspire calculates tax based on the Work Ticket’s Ship To address, ensuring the correct local tax rates are applied based on the exact destination of the allocated goods. This amount appears in the Use Tax Total field.

Allocate Use Tax across multiple work tickets

If you are receiving materials that will be used across different locations, you must allocate them to accurately assess local tax rates.

1. On your purchase receipt, add your materials.

2. Select the paper icon to open the Purchase allocations window.

3. Update the quantities to each property/service- Ticket or Inventory location line item.

   • Aspire automatically fetches the specific Ship To address for each assigned work ticket.

4. Select Save to close the Purchase Allocations window.

5. The use tax for the purchase receipt is calculated based on the various Allocation location addresses.

Aspire calculates tax with Avalara, ensuring the correct local tax rates are applied based on the exact destination of the allocated goods.

What happens next

After saving, the Use Tax liability is recorded in Avalara for reporting and reconciliation. The Invoice date reflected on the Purchase receipt is reflected at the Tax Calculation Date in Avalara. Deleting the purchase receipt in Aspire will automatically void the record in Avalara.