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Add Custom Tax Rules

This article applies to:Avalara AvaTax Update

Add custom tax rules to determine how items with custom tax codes are taxed or to override tax rules for Avalara tax codes. Use them for broader objectives too, like overriding (or eliminating) tax rates for specific jurisdictions or applying special requirements related to customer use. Before you add a tax ruleHoverTT.png, you must add where you collect tax, tax codes, and items.

Go to Settings > Manage Advanced Company Settings > Manage Custom Tax rRules to add a custom tax rule.

The steps you take vary by the type of tax rule you're adding. The available types are:

  • Taxability: Identifies a tax code as either taxable or non-taxable in a specified taxing jurisdiction
  • Exempt entity: Indicates how to handle an entity use code’s taxability in a particular jurisdiction (entity use codes are generally associated with customers, not items). An entity use tax rule can be applied only to an entity use code or a combination of entity use code and tax code.
  • Base override: Identifies the percentage of the base (sale) amount that's considered taxable
  • Rate override: Overrides a standard tax rate returned by AvaTax Update and, instead, uses a specified tax rate for a particular taxing jurisdiction. You may need to adjust transactions processed using rate override tax rules. For tax return purposes, transactions must conform to the established rates for the jurisdictions involved in the transactions.


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