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About Local Jurisdictions

This article applies to:Avalara AvaTax

If you have local jurisdictions in any of the following states --  Alabama, Alaska, Arizona, California, Colorado, Idaho, Louisiana, Mississippi, Puerto Rico, or Texas -- read the following carefully.

Correctly choosing how to maintain optional local jurisdictions in the Admin Console is critical to getting accurate tax calculations. It's strongly recommended that if there are any uncertainties as to where you should be collecting and remitting tax, contact the appropriate state or local tax agencies. State and local authorities have varying definitions of what constitutes "substantial physical presence" and who is liable for collecting and remitting in their districts. In addition, contact Avalara Professional Services, an accountant, a tax attorney, or other qualified tax professional to conduct a jurisdiction analysis for your business.

In most states, vendors are required to collect all local taxes if they are required to collect the state tax. The configuration for these states in the Admin Console offers no local jurisdictions selection. When you select one of these states, tax calculation is performed for all local jurisdictions (county, city, and special tax jurisdictions) automatically. For example, once the state of Kansas is selected, AvaTax automatically calculates a state, county, and city tax on a taxable transaction into the city of Topeka.

A small number of states require local jurisdictions to be selected for AvaTax to accurately process a transaction in a county, city, or special tax jurisdiction within them. These states are Alabama, Alaska, Arizona, California, Colorado, Idaho, Louisiana, Mississippi, Puerto Rico, and Texas. If you don't collect tax for the local jurisdictions, your customer may be responsible for paying use tax.

A Select Jurisdictions button becomes active once you Save your selection of one of these states. To choose how to maintain Optional Local Jurisdictions, select one of two options: 

  1. Selective: Select the individual optional local jurisdictions in which to calculate tax. All available local jurisdictions appear. Select the check box for each appropriate jurisdiction in which you have a "substantial physical presence". To save the local jurisdictions, click Save.
  2. All: All optional local jurisdictions are selected by default, and local tax is calculated regardless of whether you sell into a compulsory or optional jurisdiction.

Compulsory Local Jurisdictions are automatically selected. 

Below is a summary of how AvaTax handles the local jurisdictions for each state listed above. Be sure to review and understand each state before altering the configuration in the Admin Console.

Alabama

The Admin Console lists self-administered jurisdictions only. Tax is automatically calculated for all state-administered jurisdictions. Select the check box next to the local jurisdictions where you're required (or want) to collect. Bear in mind that once you start collecting tax in a self-administered jurisdiction, you're liable for filing a return there.

Alaska

All local jurisdictions listed are self-administered. Select the check box next to a local jurisdiction only if you're required to collect in that jurisdiction.

Arizona

All listed local jurisdictions are self-administered cities. Select the check box next to a local jurisdiction only if you're required to collect in that jurisdiction. The Arizona license type you initially apply for determines whether you file a transaction privilege tax (Tax type: Sales tax) or use tax (Tax type: Sales or sellers use tax) form. If you're a use tax (Tax type: Sales or sellers use tax) filer, no county tax is calculated.

California

All local jurisdictions are state-administered. Local jurisdictions listed represent those on the state’s District Tax Schedule (supplemental schedule to state return).

Per the state:

  • As a seller, you must collect, report, and pay district sales tax (called a transaction tax) or use tax on your taxable sales and leases if you:
    • Have a business location or are engaged in business within the district;
    • Lease, store, or consume tangible personal property in the district; or
    • Sell or lease vehicles, undocumented vessels, or aircraft that will be registered in the district.
  • You're engaged in business in a district if you are a retailer who:
    • Maintains, occupies, or uses any type of office, sales room, warehouse, or other place of business in the district, even if it is used temporarily, indirectly, or through an agent; or
    • Has any kind of representative operating in the district for the purpose of making sales, making deliveries, or taking orders; or
    • Receives rental income from leases or tangible personal property located in the district.

There are some differences between the rules that apply to the payment of taxes in districts and the payment of sales and use taxes in general. You should refer to Publication 44 (tax tips for district taxes) for more information.

Colorado

In most cases, AvaTax automatically selects and maintains the local jurisdictions that are considered mandatory or compulsory, but none of the optional jurisdictions. The exception to this scenario is Colorado. A compulsory local jurisdiction is one that requires collection of tax if you have nexus in the state. Since these jurisdictions are compulsor​y, they can't be selected.

The Admin Console lists all local jurisdictions, both state-administered and self-administered. Counties are always state-administered.

Complicated formulas exist for intrastate transactions.

  • If shipping from and to the same city, your business needs to calculate city tax if the local jurisdiction is state-administered (or if the local jurisdiction is self-administered and your business is registered in that jurisdiction).
  • If shipping from and to a different city, your business does not need to collect city tax.
  • If shipping from and to the same county, your business needs to calculate county tax.
  • If shipping from and to a different county, your business does not need to collect county tax.

The only state-administered jurisdictions that are required for out-of-state sellers are transit-related special taxing jurisdictions.

Idaho

All local jurisdictions listed are self-administered. Select the check box next to a local jurisdiction only if you're required to collect in that jurisdiction.

Louisiana

All local jurisdictions are self-administered, including parishes and their special tax jurisdictions. Be sure to select special tax jurisdictions that apply to parish.

Mississippi

AvaTax selects and maintains the local jurisdictions that are considered required. Be sure to select any optional local jurisdictions.

Puerto Rico

AvaTax selects and maintains the local jurisdictions that are considered required. Be sure to select any optional local jurisdictions.

Texas

All local jurisdictions are state-administered. Choose All unless you know otherwise. On rare occasions, customers based in Texas can individually select here (choose Selective and select the local jurisdictions where you want to collect).