Vendor skipped the tax? Avalara catches it in QuickBooks Online

If your business buys from an out-of-state vendor, or one that isn’t registered to collect sales tax where you operate, the tax obligation doesn’t go away. It shifts to you. That’s consumer use tax, and it’s the kind of thing that hides in plain sight until a state audit brings it up.

Most growing businesses handle consumer use tax the hard way: someone in accounts payable reviews vendor bills, makes a guess at whether use tax applies, and manually creates a journal entry when it does. This process is slow, easy to get wrong, and rarely gets caught until it’s already a problem.

Avalara is changing this directly inside QuickBooks Online.

Avalara for QuickBooks Online now includes automated consumer use tax handling on purchase transactions. Connect and enable the integration with your QuickBooks Online company to get started. It will check every purchase transaction you save against what should have been charged, using Avalara’s regularly updated tax content across 12,000+ U.S. sales and use tax jurisdictions. If a vendor undercharged beyond a threshold you set, Avalara creates the accrual journal entry for you. If everything checks out, or a vendor overcharged, it leaves a note on the bill, so you have the record. This feature runs inside the QuickBooks Online workflow you already use to manage bills.

In the Avalara Payables module, set your vendor and threshold rules once: which vendors you trust, which are exempt, and how much variance you’re willing to ignore. From there, Avalara handles every vendor bill automatically:

• If the tax charged is correct, nothing changes except a note confirming it.
• If a vendor overcharges, you get a note flagging it for your records.
• If a vendor undercharged within your ignore threshold, it’s treated as immaterial.
• If a vendor undercharged beyond your threshold, Avalara posts the journal entry, debiting Use Tax Expense and crediting Consumer Use Tax Payable.

Avalara never touches the original bill itself. It only adds a note and, when needed, a separate journal entry, so your records stay clean and easy to explain later.

Avalara has long helped QuickBooks Online businesses get sales tax accurate on what they sell. The Payables module covers the other half of the picture: what you buy. As your business adds vendors, states, and purchasing complexity, that’s exactly where use tax exposure tends to build up, especially for construction and manufacturing businesses managing purchases across multiple jurisdictions.

If your business qualifies for Streamlined Sales Tax (SST), pairing it with automated consumer use tax handling closes the compliance loop. While SST manages your sales tax obligations across participating states, automated use tax takes care of your vendor purchases. Together, they cover both sides of your tax exposure.

If you’re already using Avalara for QuickBooks Online, turning this on starts with adding the AvaTax for Accounts Payable subscription. If you’re currently running QuickBooks Online without Avalara, you can add Avalara for QuickBooks Online and get sales tax automation and this vendor bill capability set up at the same time. Either way, once it’s configured, it runs in the background, bill by bill.

Talk to Avalara to get started or visit the Avalara Knowledge Center for setup details.