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Why the tax rate of negative tax is not same as when the positive tax was originally generated?

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Why the tax rate of negative tax is not same as when the positive tax was originally generated?

 

Question:

 

When I changed setting of my subscription and created a bill run to return the amount which has already been paid in old invoices.

The tax rate is different from the tax rate when the charge was billed. Why is that? (I'm using Avalara)

 

Explanation:

 

If Avalara Integration has already been configured in the tenant. When calculating tax, we will send data to avalara when each invoice is generated.

Which means the system will not check what is the tax rate used when the invoice was generate, tax will be calculated again when the negative amount happens.

 

But Tax Rate might change on Avalara side according to local policy, so Avalara will use the Invoice Date specified in the Bill Run to get the tax amount.

 

If the Invoice Date specified in the 2nd Bill Run is not same as the 1st Bill Run, the tax rate might be different.

 






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4 REPLIES 4
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Re: Why the tax rate of negative tax is not same as when the positive tax was originally generated?

Solution:

 

To make sure same amount of tax be returned in the 2nd Bill Run, we could specify the same Invoice Date as the 1st Bill Run so the tax rate would be same.

 






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Student

Re: Why the tax rate of negative tax is not same as when the positive tax was originally generated?

This is not a realistic solution. If we have a customer that changes the number of licenses in a period when the new rate applies, we cannot backdate the invoice so that the new invoice is dated from the old period. This creates a mismatch in the reporting. Is there another solution for this? We have run into this many times already and have not found any reasonable answer.

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Re: Why the tax rate of negative tax is not same as when the positive tax was originally generated?

You're right the invoice date might cause mismatch in some reporting.
Since this is an issue happens in the integratoin with Avalara, so how Avalara is taking our requests will also limit the possibility we could achieve.
And for now, this is the only solution I'm aware of to get the exact same tax rate when returning the paid part..






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Student

Re: Why the tax rate of negative tax is not same as when the positive tax was originally generated?

We use zTax and it's the same issue. How could it be possible that all of your other customers have not run into this issue? This is a major design flaw because everytime there is a change in a tax rate and a change in the amount of licenses, we get an incorrect tax amount. In addition, what if we establish nexus in a new jurisdictions and have to collect on a customer we previously did not neeed to collect on. We'll end up charging the customer a highly inflated amount. This is also something we've run into.