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Avalara Help Center

Manage Product Taxability

This article applies to:Avalara AvaTax

Apply tax codes to manage item taxability. Assigning product and product categories to items gives you important jurisdictional subtlety in taxability. Avalara has predefined system tax codes with a taxability profile in place for all US states. Or, create your own custom tax codes and tax rulesHoverTT.png in the Admin Console. Keep in mind that Avalara updates system tax codes when taxability rules change, but custom tax codes and rules are maintained by you; they're not updated when tax laws change. Also, make sure you enable nexus in the jurisdictions where you're required to register and collect tax so AvaTax calculates the full tax amount.

Map items to tax codes

  • A tax code is a unique code for similar products, services, or charges that tells AvaTax what kind of sales tax, if any, to charge for them. To learn more about tax codes and how to use them, read what is a tax code? 
  • It's a best practice to map items to tax codes in your accounting software. Find your integration to learn how to map tax codes in your accounting system.
  • If you can't pass a tax code from the item management screen, or if you need a remotely-hosted mapping system to accommodate multiple integrations, map the items to tax codes in the Admin Console.
  • If you map in your accounting software and the Admin Console, the Admin Console mapping supersedes any mapping in your accounting software.
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Map items to UPCs

For an item, you can choose to send the model number or the UPC (Universal Product Code) from your accounting software to AvaTax. If the UPC is not available, the model number is set as the default and sent to AvaTax.

To customize taxability for specific products, tax codesHoverTT.png need to be mapped to UPCs, and model numbers. Items that aren't mapped to tax codes are treated as Tangible Personal Property (TPP), and are fully taxed during calculation. Avalara has other ways to help with product taxability, including AvaTax System tax codes and UPC content.

Next steps

You're almost finished setting up your integration. Now send a test transaction from your system to AvaTax to make sure you're calculating sales tax accurately.