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Map Items to Tax Codes

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 Avalara tax code with a taxability profile in place for all US states. Or, create your own custom tax codes and tax rulesHoverTT.png in AvaTax. Keep in mind that Avalara updates Avalara tax code 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. Mapping items to tax codes informs AvaTax  which tax rules to use when processing transactions that include the mapped items. There are 3 ways to map your items. You can map them in AvaTax or your accounting software; or choose to map groups of items to a single tax code in certain accounting systems.

  • 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.
  • 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 software.
  • 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 AvaTax.
  • If you map in your accounting software and AvaTax, the AvaTax mapping supersedes any mapping in your accounting software.
How Do I Map Tax Codes - Final.png

Map items in the Admin Console

Map one or more items to tax codes in the Admin Console.

  1. On the Organization tab, click the Items button items.giffor a company.
    01_AvaTaxCalc-Organization-TaxProfile-SelectItems.png
  2. On the Items screen, select the check box next to one or more Item Codes.

    AvaTaxCalc-Organization-TaxProfile-SelectItemCheckBox.png
  3. Click Map.

    AvaTaxCalc-Organization-TaxProfile-ClickMapItem.png
  4. On the Map Item(s) to Tax Code screen, edit the Item List if desired:
    • Select one or more Items and click Remove
    • Click Reset to restore the Item List
  5. In the Tax Code Picker dialog, create a tax code filter by entering data for any or all of the following:
    • Tax Code
    • Description
    • Type
    • Category: Select AvaTax to choose from our list of AvaTax Sytem Tax Codes or select Custom to use your own custom tax code.
      TaxCodePickerFields.png
  6. Click the Search button to run the filter.
  7. In the filter results, click the Expand button Picture of the expand button next to each group of tax codes. Tax codes appearing in red are the result of filtering.
    TaxCodePickerSearchResults.png
  8. Click a Tax Code to select it and close the Tax Code Picker dialog.
  9. Click Save.
  10. The Item appears in the Items List with the newly mapped tax code.

Map items in your accounting software

Product class item mapping

Product class item mapping refers to the ability to link a single tax code to a collection of item numbers or SKU’s within an ERP system. The benefit of being able to use product class item mapping is that you can assign one code to tens, hundreds, or thousands of SKU’s in a single instance, which is ideal for companies that have an extensive product catalog. Another benefit is that you can readily monitor and keep track of your item master list within the ERP system without having to maintain an item mapping matrix outside of your item master list.

Exceptions & considerations for product class item mapping

If you're a SST (Streamlined Sales Tax) returns customer you need to run your configuration options by your GoLive Implementation Consultant. There are specific product description requirements which may not allow you the option to use product class item mapping.

Mapping within the Admin Console always supersedes item mapping within an accounting software or ERP system.

If you have multiple AvaTax integrations, such as an ERP system and an Ecommerce platform, you need to verify that item mapping is consistent between the two platforms. Items within an ERP system are often categorized without sales tax in mind which can lead to confusion and miscalculations when product class mapping is applied.

Let’s use the example of a clothing company:  

Within their ERP system they have categories for pants, shirts, accessories, and shoes. These categories are set up with the order fulfillment center and used to help track and maintain inventory. For the AvaTax integration this company has decided they want to utilize the product class mapping feature available to their ERP system which will allow them to map by several items at a time instead of mapping to each individual item. This will help them calculate the appropriate sales tax for the hundreds of varieties of shoes they sell. The first thought in regards to mapping the shoe category is to use tax code PC040144 which is for shoes and shoe laces. One easy to manage tax code for their entire assortment of shoes, which sounds great! Let’s then take into consideration that out of the different varieties they sell they offer ballet & tap shoes. In this instance they may run into taxability issues as ballet & tap shoes may not be classified as clothing items depending on which states are involved. In fact, AvaTax offers the system tax code of PC040401 specifically for ballet & tap shoes. From here this company has additional configuration options to consider.

Use product class item mapping