What is Tax Out of Balance?

A Purchase Order invoice is considered to be "tax out of balance" if the tax amount entered on the invoice header does not equal the sum of tax amounts on each invoice detail line for goods and AOC. The Tax Out of Balance condition applies only to PO invoices, namely:

  • Match invoices

  • AOC Only invoices (depending on whether the cost component is set to Yes on Handling Code (MA05.1))

The setup for this condition happens in the Tax application. You setup tax tolerance amount using Tax Code Maintenance (TX02.1). The application uses this amount to compare tax difference on a PO invoice. If the difference between the

  • tax on the invoice header and

  • the sum of the detail lines

is greater than the tax tolerance amount, you cannot release or match the invoice. The Tax Code and Tax Rounding Account fields on AP00.4 are used to create a tax distribution for the" tax out of balance" amount. You can still override the tax on goods and AOC at invoice entry, using the Tax Adjustment field. Entering an Invoice that has Tax

A "tax out of balance" condition can occur, for example, if the tax amount calculated in the match process has a rounding error, and could be different than the tax entered on the invoice header. By identifying the tax discrepancy before the invoice is matched, you reduce the amount of manual intervention from the Accounts Payable department (no need to delete the invoice and create a new one).

An error message displays if you try to release or match a PO invoice with "tax out of balance" on the goods or AOC. However, if the tax difference is within tolerances, you receive no message and the application posts the discrepancy to the tax tolerance account defined using Company (AP00.4).