Sales Tax Processing
This feature requires additional licensing. Please contact AcctVantage Sales for a quote.
When one of the supported Tax API integrations have been setup, the tax calculation process is essentially automatic. Sales tax will be calculated and transmitted to the Tax API for reporting without the user needing to interact in any way.
The purpose of this article is to shed light on when AcctVantage communicates with the Tax API and how this translates to your tax reporting.
Tax APIs limit the number of "calls" to their service for each transaction so we've designed AcctVantage to minimize the communication while still providing a thorough user experience.
Automated Tax Calculation
There are three Sales Order statuses where AcctVantage will automatically contact the Tax API for tax calculations:
- Committed
- Shipped/Invoice
- Posted
Committed Orders
AcctVantage first communicates with Tax API when an Order is marked as Committed. AcctVantage sends details about the Order including Ship To address, Product info and Client info.
The Tax API returns an overall tax rate for the order to AcctVantage. This will account for any product and/or client exceptions.
If quantity, sell price or any other details of the order are changed at any point after the tax has been calculated, the system will flag the order as (Recalc Needed) and the tax amounts will be zeroed-out.
At that point, you can force the system to manually recalculate tax on the order. If you do not do this, the tax will still be recalculated when the order is saved in Committed status or changed to Shipped/Invoice status.
Shipped/Invoice
When an order is changed to Shipped/Invoice status, AcctVantage will send full detail of the order to the Tax API for a second time. Sales tax will again be recalculated, as necessary.
This is the final opportunity to modify the sales tax for an order in AcctVantage.
Posting
When an invoice is Posted, AcctVantage will make a final call to the Tax API to "commit" the Invoice to the tax system. At that point, the tax system takes over the reporting of taxes for your various juridictions.
Manual Tax Recalculation
At any time, you may force AcctVantage to call the Tax API service by clicking the Recalc Totals button (i.e. the calculator icon, see below).
For example, if you change the Ship To address after saving the order as Picked or Packed, the Tax API will not be aware of that change until changing the status to Shipped/Invoice. In that scenario, a click of the Recalc Totals button will force the system to send the new Ship To address to the API and therefore recalculate the sales tax.
AvaTax only: Use the service to calculate (but not report) on sales tax
You may wish to utilize the AvaTax service to calculate your sales taxes, but not report them. To do so, check the Disable Document Committing setting in the AvaTax setup screen.
We do not recommend using this feature for regular operations. All AvaTax calculated tax liability is posted to a single Tax Area in AcctVantage, so if you collect in more than one location your reporting will be very difficult. The integration was written and intended to pass the tax reporting burden to the web service.
A reasonable use of the Disable Document Committing checkbox would be testing to ensure AvaTax is returning valid response.
Tax API Communication Log
See this article for more info on the AvaTax Communications Logs.