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Understand Tax Types

This article applies to:Avalara AvaTax Update

AvaTax Update can calculate many different kinds of taxes for your business, ranging from international tariffs to specific local taxes. Consult a tax professional about what taxes your business needs to collect and remit, and speak with your Customer Account Manager (CAM) about setting up AvaTax Update to calculate taxes beyond sales and use tax. 

Most businesses need to collect and remit sales and use taxes. Other kinds of taxes that AvaTax Update can calculate for you include:

Tax Type of tax Description
Sales tax State or local A transaction tax collected and remitted by an in-state seller with a "substantial physical presence" in the taxing jurisdiction. Typically chosen by an in-state taxpayer whose official business address is in the state.
Sellers use tax State or local A transaction tax collected and remitted by an out-of-state seller with no physical location, but with a "substantial physical presence" in the taxing jurisdiction. Typically chosen by out-of-state tax payers.
Lodging tax State or local

A tax on short-term rentals of rooms or other real-estate, typically collected and remitted by the property owner. This tax could be charged per night, per person, or on the total cost of the stay, depending on local tax laws.

Also called "hotel tax," "room tax," "tourist tax," or a multitude of other variations on the same theme.

Bottle tax State or local

If you sell goods in plastic or glass bottles, you may have to participate in a local bottle deposit program, depending on what jurisdiction you're selling in. AvaTax Update can calculate the relevant taxes for you.

Electronic waste tax State or local A tax charged on retail purchases of certain electronics in order to cover the future cost of recycling them. Like sales and use tax, retailers are expected to collect and remit this tax to the relevant taxing jurisdiction.
Bike tax State or local Oregon, which doesn't have any general sales tax, charges a specific tax on bike sales in order to fund infrastructure projects for pedestrians, bikes, and other non-motorized commuters.
Checkout bag tax State or local Some jurisdictions have a tax on certain kinds of grocery bags to encourage businesses and consumers to use recyclable bags instead of non-biodegradable plastic ones.
VAT / GST International A customs tax charged on goods being imported to certain countries. Unlike most customs duties, you might not have to pay these taxes depending on where you're shipping from. For example, you can ship goods from any country in the European Union to any other country in the EU without needing to pay VAT. If your business is shipping internationally to countries with VAT or GST, manage your place of supply and VAT sales threshold settings to help AvaTax Update calculate these taxes for you.
Customs duty International A tax on goods crossing international borders. If you have regular international sales, AvaTax Update can calculate customs duties for each country that you sell into, letting you keep your customers informed of these fees when they're placing their orders.

 

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