Some products and services are taxed differently in different jurisdictions. Apply Avalara tax codes to products and services you sell to help account for this varying taxability. There are a few different ways you can apply, or map, Avalara tax codes to your products and services:
- Map items to predefined Avalara tax codes; associate a code with each item you sell so AvaTax knows which tax rate to apply
- Map items to universal product codes (UPCs)
Items that aren't mapped to Avalara tax codes are treated as tangible personal property (TPP) and are fully taxed during calculation.
Map an item to a tax code
The process is simple. Map items to Avalara tax codes, and when your accounting software processes transactions or when you upload the transactions to AvaTax, AvaTax determines the taxability for the items you sell based on the rules behind these Avalara tax codes. For more information about Avalara tax codes, see Select Avalara Tax Codes.
Avalara recommends you map items to Avalara tax codes in your accounting software. To learn how to configure your accounting software to map Avalara tax codes in your accounting software, check your accounting software configuration documentation. See our handy chart for a little guidance deciding whether you should map items to Avalara tax codes in your accounting software or directly in AvaTax.
Keep in mind that Avalara updates Avalara tax codes when taxability rules and laws change, but you have to maintain your own custom tax codes and rules; these aren't automatically updated when changes occur. To be sure you're using the most current rules to tax your products and services, use Avalara tax codes. If you map your items to universal product codes (UPCs), you don't need to use Avalara tax codes because UPCs already have taxability rules associated with them.
If you map in your accounting software and in AvaTax, the mapping in AvaTax overrides any mapping in your accounting software.
Map an item to a UPC
Instead of using Avalara tax codes, send the model number or the UPC from your accounting software to AvaTax. If the UPC isn't available, the model number is set as the default and sent to AvaTax. To customize taxability for specific products, items need to be mapped to UPCs and model numbers.
You're almost finished setting up your integration. Now send a test transaction from your accounting software to AvaTax to make sure you're calculating sales tax accurately.