BTerrell Group Blog

Configuring Intacct for Sales Tax Compliance Part 2

Posted by Chris Firra on Tue, May 20, 2014

by Chris Firra

5 20image1 resized 600





In a previous article, I posed a question of how Intacct could be configured to provide sales tax compliance for a multi-state services company.  In that article, we reviewed Intacct's Advanced Tax configuration, and found that it could enable accounting departments to "in-source" the company's sale tax calculation and reporting, but did not offer much help in simplifying the chore of keeping track of new jurisdictions and tax rates.  


The alternative to in-sourcing, is of course, outsourcing.  Outsourcing tax compliance is nothing new.  CPA firms have always performed these types of services for small businesses.  What is relatively new are the technologies that enable automated sales tax outsourcing that is fast, efficient, and cost-effective.  This is leading to an in increased use of outsourced tax compliance services.  A 2011 survey of the readers of AICPA Corporate Tax Insider found that more than half of the respondents reported that they were outsourcing some aspect of their tax function and even more were planning to do so in the future.  Not surprisingly, the predominant reasons cited were (1.) to "increase time for higher value activities", and (2.) a "lack of qualified tax professionals."    


 5 20image2 resized 600

The prime example when it comes to Intacct of an integrated provider of sales tax compliance is the subscription-based AvaTax from Avalara, a SaaS provider of sales tax automation.  AvaTax utilizes Intacct's web services API to seamlessly identify correct tax jurisdictions and tax rates related to sales and purchases transactions and then return the correctly calculated sales tax amounts for customer invoices.  AvaTax outsources the accounting department’s burden of maintaining jurisdictions and tax rates in Intacct.

Let’s review the steps to configure AvaTax for Intacct: 

Step 1: Subscribe to AvaTax from Avalara either by contacting BTerrell Group, or directly contacting Avalara.

Step 2: Enable Avalara AvaTax in Intacct from the Company Subscriptions screen.

5 20image3 resized 600 








Step 3: After receiving login credentials from Avalara, Configure AvaTax in the Avalara customer dashboard, where one or more Intacct companies may be added.  For each company, the required jurisdictions may be selected and subscribed, by area, state or country.   

 5 20image4 resized 600


Step 4: Intacct must be configured to connect to AvaTax. The information necessary to make a web services call to AvaTax must be entered, consisting of the following:  

  • Account ID
  • License key
  • Login ID
  • Login password
  • CompanyID   (Note: it's a good practice is to use the corresponding Intacct Entity ID as the company ID in AvaTax in order to make set up simpler.)


 5 20image5 resized 600








Additionally, turn off any active Intacct Tax Schedules used previously.

Step 6: tag each Intacct item (both inventory and non-inventory) with the appropriate Avalara Tax Code, which assigns the tax treatment classification.  This step is critical, but rest assured that the implementation team at Avalara is prepared to assist with questions regarding proper coding.  Also note that item updates may be imported from a .CSV file.


5 20image6 resized 600












After these steps have been completed, Intacct is ready to calculate correct tax amounts and Avalara is ready to track and report taxable sales for reporting.  At the end of each reporting period, AvaTax generates summary reports and data exports that may be used to facilitate report preparation as well as detailed reports to provide full accountability and auditability.  Alternately, Avalara Returns will file returns and remit tax payments for fully outsourced sales tax compliance management.

When evaluating the two approaches presented, it's fairly clear that in a multi-state environment, using sales tax automation from Avalara provides greater simplicity and efficiency, especially when operating with a "lean" accounting staff (and who doesn't these days?).  Contact BTerrell Group if you'd like more information regarding maintaining sales tax compliance with Intacct.

Tags: sales and use tax, Intacct

Configuring Intacct for Sales Tax Compliance Part 1

Posted by Michelle Tanner on Tue, May 06, 2014

by Chris Firra


I recently attended Intacct’s Advanced Implementation Training, where a variety of topics were examined. One of the class exercises caused me to think about the controller's chore of maintaining sales tax compliance when a company has multi-state tax liabilities. It's a task that is often under-appreciated in terms of its complexity and risk.   


Imagine that you are the controller of a services company with customers dispersed in an expanding number of states and localities. You select Intacct as your new best-of-breed, cloud-based accounting system, and you decide that your customer invoicing may be done through the A/R module. However, when you reach the point of configuring sales tax, you see that Intacct provides two options to handle your multi-state sales tax requirements, and you now wonder which option to select.  


Today, I'll focus on the first of these options, "Advanced Tax configuration." Sales and use tax calculation is built into Accounts Receivable, Order Entry, Accounts Payable and Purchase Order modules, so there are no additional subscriptions required to implement this strategy. The initial set up is straight-forward, but can be somewhat lengthy. As implied in the slide below (thanks to Intacct instructor, David Bell), sales tax configuration involves adding tax authorities with corresponding rate details, tax schedules, and then defining the taxability of both customers and items by "tagging" them with the appropriate tax group.


5 6image8 resized 600 


Let's examine the required configuration steps for setting up the first tax jurisdiction when billing is done through A/R.  


Step 1: Configure Accounts Receivable or Order Entry to enable sales tax calculation on A/R invoices and to enable the use of Tax Schedules, the purchase of which we will see a little bit later.

describe the image 
Step 2: Set up each Tax Authority for which the company has nexus. Keep in mind that the name of tax authority cannot contain non-alphanumeric fields, such as commas. An example of a valid tax authority might be City of Dallas TX or Cook County IL.

describe the image
Step 3: Create corresponding Tax Details, which contain the tax rates for each Tax Authority. There should be at least one tax detail for each tax authority.

describe the image
Step 4: Create a tax schedule for each locality or combination of tax rates that will be encountered. For example, you'll need a Tax Schedule for taxable sales within the City of Dallas, TX, which will be subject to the combination of sales tax from the State of Texas, City of Dallas and the Dallas Mass Transit Authority.

describe the image
Step 5: Tag each item sold within a tax group (Taxable or Non-taxable).
Step 6: Tag each customer with a contact tax group indicating jurisdiction in Customers Additional Information tab under Invoicing details. 

describe the image 


If invoices are generated from Order Entry, there is are additional steps, which include tagging each taxable sales item with a tax group and setting up Tax Schedule Map for each jurisdiction. 


describe the image 


Of course, a tax line must also be part of the invoice Transaction Definition in order to calculate and display sales tax amount on a customer invoice.


Once these configurations for Advanced Tax set up complete, invoices for multiple tax authorities can be generated and tracked.


 describe the image

However, the controller's job of maintaining the sales tax configuration is not done and, in fact, it never quite is. Each new tax jurisdiction must be added and tax rates as well as item tax treatments must be maintained. This task is manageable, as long as the number of tax jurisdictions is not overwhelming. However, in a multi-state setting, the number of tax jurisdictions could number in the hundreds. Changing tax rates and tax treatment of items can require a near full-time employee equivalent to maintain the system.


In a future article, we'll take a look at the second option for Sales Tax in Intacct, which uses Ava-Tax, to reduce both the labor and risks of maintaining sales tax compliance in a complex environment. Please contact BTerrell Group if you have questions about the best method for maintaining sales tax compliance for your company.


Tags: sales tax, sales and use tax, Intacct