# How do I setup taxes with Invoice AI to match my business needs?
## Invoice AI: Frequently Asked Tax Questions
1. Does Invoice AI replace the native tax engine and/or products like Sovos and Avalara?
**Region:** All
No. Invoice AI does not calculate tax and does not replace a tax engine. It only captures invoice data.
**United States**\
Invoice AI can extract the total tax listed by the vendor and place it on a separate line. It is not calculating tax. It is only capturing what already exists on the invoice.
**International**\
Invoice AI should be used alongside a tax engine such as SuiteTax or a third-party solution that performs the actual tax calculation and posting. Invoice AI supplies data but does not replace the tax engine.
| Legacy Tax | SuiteTax |
| -------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ |
| Legacy tax configuration handles official tax logic, compliance and calculation. | SuiteTax configuration handles official tax logic, compliance and calculation. |
2. How does Invoice AI work with SuiteTax?
**Region:** All
Invoice AI does not extract or calculate tax. It reads values from the PDF and populates the Vendor Bill only. NetSuite's tax engine performs all tax calculations.
| Legacy Tax | SuiteTax |
| --------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------- |
| Invoice AI supplies line-level item or expense amounts only. Legacy tax rules configured in NetSuite determine the tax that is applied. | Same core behavior. Invoice AI supplies line-level item or expense amounts, and SuiteTax calculates tax based on the existing configuration. |
3. How does touchless work with variable tax/shipping?
**Region:** All
Touchless invoice processing requires an exact match between PO and Bill lines. If there is Tax and shipping added to the bill that was not on the PO, the bill will not auto-process and requires manual review.
4. Can the tax account be defaulted to the default account on the vendor record?
**Region:** All
Not currently.
5. Can you automatically code taxes to different GL accounts/items depending on the invoice?
**Region:** All
No. Invoice AI cannot choose different tax accounts based on the invoice. It can extract the total tax amount and place it on one predefined item or GL account. Only a single default can be used for that extracted tax line.
| Legacy Tax | SuiteTax |
| ------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ |
| Tax accounts are determined by Legacy tax setup in NetSuite. Invoice AI does not influence account selection. | Same behavior. SuiteTax determines tax accounts based on configuration. Invoice AI does not control posting. |
6. If you manually set a tax code on the line in Invoice AI, will Invoice AI remember the association?
**Region:** All
No, Invoice AI will defer to the tax setup in NetSuite or third-party tax engine to determine tax codes and will not try to learn based on previous invoices.
| Legacy Tax | SuiteTax |
| ------------------------------------------------- | ----------------------------------------------- |
| Manual tax codes follow Legacy tax configuration. | Manual tax codes follow SuiteTax configuration. |
7. Are we able to use AI directions to auto calculate tax amounts based on pre-defined tax rates within the direction?
**Region:** All
No. AI Directions extract information from the invoice. They are not designed to compute or apply tax rates.
| Legacy Tax | SuiteTax |
| ------------------------------------------------------ | ------------------------------------------------------ |
| Tax calculation must come from NetSuite configuration. | Tax calculation must come from NetSuite configuration. |
8. Can the tax hit the same account as the other expense lines hit?
**Region:** USA
Not currently.
| Legacy Tax | SuiteTax |
| ----------------------------------------------------------------- | --------------------------------------------------------------- |
| Tax posting accounts must be handled by Legacy Tax configuration. | Tax posting accounts must be handled by SuiteTax configuration. |
9. Can tax be distributed to other lines?
**Region:** USA
No. Invoice AI cannot distribute tax across other lines. Invoice AI only populates extracted values.
| Legacy Tax | SuiteTax |
| ----------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- |
| Tax distribution behavior must be handled by Legacy Tax configuration or custom workflow. | Tax distribution behavior must be handled by SuiteTax configuration or custom workflow. |
10. Canada has an environmental tax that is incurred for trucking, emissions related taxes. Can we extract that tax line to code to a different GL account aside from other "tax" charges?
**Region:** Canada
Invoice AI treats that charge as another tax amount and cannot split different tax types or route them to separate accounts. If you need this fee isolated consistently, vendor formatting or a NetSuite customization may be required.
11. How to have HST, GST put on the line without double adding?
**Region:** Canada
Invoice AI should not be used to calculate or determine tax. Invoice AI only reads invoice data and populates the Vendor Bill. All tax calculation and application is handled by NetSuite based on your tax configuration.
| Legacy Tax | SuiteTax |
| ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Use Tax Groups. Each tax, such as HST and GST, remains its own tax code, and the Tax Group allows multiple taxes to apply to a single line without double calculation. NetSuite automatically calculates the combined tax rate. For more information, see the Legacy Tax article: . | Multi-component taxes are handled differently. Review your SuiteTax configuration to confirm whether a Tax Group is required in your environment. For more information, see the SuiteTax article: . |
12. Can you extract use tax (HST, GST, VAT, etc.) onto an individual line instead of having it calculated per line?
**Region:** International
Invoice AI can extract the **total** tax amount and place it on one hardcoded item or account. It cannot break out individual tax components or map them separately. Because of that, line-by-line tax extraction is not supported, and this scenario is better handled by the tax engine.
| Legacy Tax | SuiteTax |
| ------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- |
| Extracted tax is treated as invoice data only. NetSuite configuration still determines official tax handling. | Extracted tax is treated as invoice data only. NetSuite configuration still determines official tax handling. |
13. Can Invoice AI default the correct line-level tax code?
**Region:** International
Invoice AI does not assign or calculate tax codes. It only reads invoice data and populates the item or account on the Vendor Bill. Invoice AI will extract the correct expense and vendor and then NetSuite's native tax engine determines and applies the correct line-level tax code based on your configuration.
| Legacy Tax | SuiteTax |
| ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- |
| When using NetSuite's native international tax functionality, tax extraction should be disabled in Invoice AI so that NetSuite can fully control tax determination. As long as nexuses, tax codes, and item or account associations are configured correctly, international tax will calculate accurately. For more information on how Legacy Tax works, see the article: . | Same behavior. SuiteTax determines tax code defaults. |
14. Why should we use the native tax engine instead of relying on Invoice AI to extract taxes?
**Region:** International
Invoice AI is not a tax engine. It extracts values that appear on the invoice but does not calculate, validate, or maintain tax rules. Compliance, jurisdiction logic, rates, and registrations must come from a native or third-party tax engine. Invoice AI only supplies invoice data.
| Legacy Tax | SuiteTax |
| ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |
| Legacy tax configuration is responsible for official tax calculation, compliance, and posting. | SuiteTax provides jurisdiction logic, compliance, and calculation. |
## Tax Extraction Scenarios
### Scenario 1
A US-based vendor bill created by Invoice AI with tax extraction enabled. The invoice contained multiple expense lines (Electrical, Cabling, and Office/Miscellaneous) totaling $3,600.00, and Invoice AI extracted the $468.00 sales tax and posted it as a separate line to the Corporate Taxes Payable account. This keeps the tax cleanly separated from the expense lines, with no line-level tax codes creating conflicts. This is the intended behavior for US vendors using tax extraction.
### Scenario 2
A Canadian vendor bill created by Invoice AI with tax extraction enabled. Invoice AI extracted the tax from the invoice and added it as a separate expense line ($468.00 to the GST/HST Liability account). However, the expense lines also have HST tax codes assigned, causing the header-level GST/HST to calculate $520.00 on top of the line amounts, effectively double-counting the tax. *For Canadian and other foreign currency vendors with a tax engine configured, tax extraction should be left off, allowing the tax engine to calculate tax at the line level through the assigned tax codes.*
---
# Agent Instructions: Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.
Perform an HTTP GET request on the current page URL with the `ask` query parameter:
```
GET https://docs.charted.com/ap-automation/charted-faqs/invoice-ai/how-do-i-setup-taxes-with-invoice-ai-to-match-my-business-needs.md?ask=
```
The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.
Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.