What reports can Avalara generate to support audits?

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A: Avalara provides a comprehensive set of tax automation reports designed to support businesses during sales and use tax audits. These reports are accessible through the Avalara platform and help companies efficiently manage, document, and substantiate their tax compliance activities. Below is an overview of key reports and features available in Avalara’s software that are especially useful during an audit:

1. Transaction Detail Reports

Avalara’s transaction detail reports provide a granular, line-by-line record of every transaction processed through the system. These reports typically include:

Invoice numbers
Transaction dates
Customer and vendor information
Jurisdictional breakdowns
Tax rates applied
Tax amounts collected or remitted

These details are essential for auditors to verify the accuracy of tax calculations and to trace the taxability of specific transactions. The ability to filter by date range, jurisdiction, or customer/vendor makes it easier to respond to targeted audit requests [1].

2. Tax Liability and Summary Reports

The tax liability report summarizes the total tax collected and owed by jurisdiction (state, county, city, and special districts). This report is crucial for reconciling tax collected with tax remitted and for demonstrating compliance with multi-jurisdictional requirements. Avalara tax reporting tools allow users to generate these summaries for any period, which is particularly useful for audit periods that do not align with standard reporting cycles. [1].

3. Exemption Certificate Management Reports

For businesses that deal with exempt sales (such as sales to resellers or non-profits), Avalara’s exemption certificate management module tracks and stores exemption certificates. The system can generate reports listing all exempt transactions, the associated certificates, and their validity status. This is vital for substantiating non-taxed sales during an audit and for quickly identifying any missing or expired certificates that could trigger audit assessments. [1].

4. Filing and Remittance Reports

Avalara tax filing reports document all returns prepared and filed through the platform. These reports include:

Filing dates
Jurisdictions filed
Amounts remitted
Confirmation numbers or proof of filing

These records are essential for demonstrating timely and accurate compliance with filing obligations. In the event of an audit, these reports provide a clear audit trail from transaction to remittance.

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5. Reconciliation Reports

Reconciliation reports help businesses match their internal accounting records with the tax data processed by Avalara. These reports are useful for identifying discrepancies before an audit and for providing auditors with evidence that the amounts reported and remitted match the company’s books [2].

6. Audit Trail and Change Logs

Tax Software Avalara includes audit trail functionality, which logs changes to tax settings, rates, and exemption statuses. This feature is particularly important in an audit, as it allows companies to demonstrate when and why changes were made, and by whom, supporting the integrity of their tax compliance processes.

7. Custom and Ad Hoc Reports

In addition to standard reports, Avalara allows users to create custom reports to address specific audit requests. For example, if an auditor requests all transactions for a particular product category or customer type, users can generate ad hoc reports to meet these needs.

8. Document Retention and Export Capabilities

Avalara’s platform supports document retention policies by storing historical reports and supporting documentation for the required statutory period. Reports can be exported in various formats (such as CSV or Excel), making it easy to provide auditors with electronic or printed copies as needed [3].

How These Reports Support Audit Defense

Transparency: Avalara reports provide a clear, organized, and comprehensive record of all tax-related activities, reducing the risk of errors or omissions.
Efficiency: Automated report generation saves time and ensures consistency, allowing companies to respond quickly to auditor requests.
Accuracy: By leveraging Avalara’s up-to-date tax rate and rule database, businesses can demonstrate that their tax calculations are based on current law, reducing the likelihood of audit adjustments.
Documentation: The ability to produce detailed transaction, exemption, and filing records is critical for substantiating compliance and defending against potential assessments.

Conclusion

Avalara’s robust reporting capabilities are a cornerstone of effective audit defense for businesses managing complex sales and use tax obligations. By leveraging Avalara tax reporting and filing tools, companies working with Bennett Thrasher can ensure they are well-prepared for audits, with all necessary documentation readily available and organized. This not only streamlines the audit process but also helps minimize the risk of penalties and interest due to incomplete or inaccurate records.

For businesses seeking to strengthen compliance beyond audit preparation, Bennett Thrasher offers resources to help navigate a wide range of sales tax and technology challenges. Learn how to avoid expensive sales tax compliance software mistakes with Avalara, and understand what retailers need to know about collecting sales tax on in-state sales. Explore The Ultimate Guide to Sage Intacct Integrations to streamline financial operations, and review State and Local Tax Issues: Key Challenges and Best Practices for multi-jurisdictional compliance insights that keep your business audit-ready year-round.

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