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Administrator Guide
Last Updated: 2026-09-18
Tax Recovery for Invoice Write-Offs

Tax Recovery for Invoice Write-Offs

In many jurisdictions, businesses can recover a percentage of the sales tax that they originally pay on an invoice that’s later written off. To avoid manual customer invoice adjustments to record the recoverable tax amount for statutory reporting, Workday calculates the tax amounts automatically when opted in.
When you opt in to the
Enable Tax Recovery on Invoice Write-Offs
 option on the
Edit Tenant Setup - Financials
 task and create rules using the
Maintain Receivable Reasons
 report, Workday converts the customer bad debt write-off into a taxable document.
Financial administrators define tax recoverability parameters when creating receivable write-off reasons on the
Maintain Receivables Reasons
 report. When the specific reason is used in an invoice write-off, Workday records the recoverable tax portion based on the tax recoverability percentage and posts the corresponding tax adjustments to the general ledger.
You can no longer add the
Customer Accounts
 write-off reason usage to the
Maintain Receivable Writeoff Reasons
 task. When you remove the
Customer Accounts
 usage from the task, ensure that you configure the same write-off reason on the
Maintain Receivables Reasons
 report for accurate accounting.
When a write-off is in a review and revise business process, Workday uses the most up-to-date tax recovery configuration from the
Maintain Receivable Reasons
 report at the time of the write-off approval, except if:
  • The tax recovery configuration didn’t exist for the write-off reason at the time of the write-off creation.
  • You didn’t configure the tax applicability for the write-off reason at the time of the write-off creation.
Workday recovers taxes for customer invoice write-offs on these tasks, reports, and business process steps:
  • Cancel Bad Debt Writeoff
    , from the related actions menu on a write-off transaction.
  • Find Customer Invoice Write-Offs.
  • Review Write-Off Customer Invoice.
  • Revise Write-Off Customer Invoice.
  • View Accounting for Receivables Writeoff.
  • View Customer Bad Debt Writeoff.
  • Write Off
    , from the related actions menu on a customer invoice or invoice adjustment.
  • Write Off Customer Invoice
    .
Workday also recovers taxes when you unapply, reapply, and cancel customer payments with associated write-offs.
Workday creates write-off applications that perform tax recovery on customer invoices when you write off invoices during customer payment application on these tasks:
  • Apply Customer Payment
  • Auto-Apply Customer Payments
  • Edit Customer Payment
  • Record Customer Payment

SOAP Web Services

You can use these web service operations to:
  • Opt in to the tax recovery on customer invoice write-offs:
    • Get Tenant Setup - Financials
    • Put Tenant Setup - Financials
  • Configure the tax recoverability for the write-off reasons for customer invoices:
    • Get Receivables Reasons
    • Put Receivables Reason
  • Remove the the
    Customer Accounts
     option:
    • Get Receivable Writeoff Categories
    • Put Receivable Writeoff Category
  • Process transaction taxes when you submit or cancel a write-off:
    • Cancel Customer Invoice Write-Off
    • Submit Bad Debt Writeoff

Scope and Limitations

  • Applicable Tax Points
    : Tax adjustments are only created for the original invoice lines that calculated tax based on the invoice or invoice adjustment date, accounting date, or goods or service delivery date.
  • Excluded Tax Points
    : The feature excludes invoice lines where the original tax was based on the
    Payment Date
    . This is because, in a
    Payment Date
     scenario, the tax liability is only established upon payment, meaning no tax has been collected or accrued that would need to be written off or recovered.
  • Rounding
    : Workday incorporates specific logic to handle rounding differences. Any necessary adjustments to the recoverable tax amount are applied to the last line of the write-off application to ensure the total write-off amount remains accurate.
Workday doesn't support this functionality when:
  • Worktag balancing is enabled in your tenant.
  • The customer invoice has withholding tax on 1 or more invoice lines.
  • The company uses a third-party provider to calculate tax.