When AvaTax Update calculates tax and ais sent from your accounting software to AvaTax Update, there is a specific order of operations:
- Is the address taxable?
- AvaTax Update looks at the origin and destination address to see if tax needs to be collected. Learn how to tell us where you collect and remit tax.
- Is the customer taxable?
- AvaTax Update looks at the Customer/Vendor Code and sees if the customer is exempt from sales tax based on a number of methods for exemptions. Learn how to exempt your customers from sales tax.
- Is the product or service taxable?
- AvaTax Update looks at the line-level of the invoice to identify what is being sold. Learn how to manage product taxability.
Anatomy of a transaction
|Transaction data...||What it means...|
Ship-from address, ship-to address
These two addresses are important for states with unique sourcing rules.
|Customer/Vendor Code||Identification number associated with a customer or vendor. This number is linked with exemption methods in your accounting software, AvaTax Update, or CertCapture.|
|Item||Item code or SKU associated with your products or services. Mapped to tax codes in either your accounting software or AvaTax Update.|
|Tax Code||A unique label used to group items (products, services, or charges) by taxability. Can be an Avalara tax code or a custom tax code.|
|Harmonized Tariff Code||
A unique identifier to classify imported goods for customs duty. Not required for most transactions in the US and CA.
|Document Code||Identification number associated with the correlating transaction from your accounting software.|
|Line Amount||Amount listed per line on a given transaction. Used to calculate sales tax.|
|Tax Date||Date the tax is calculated. Usually the same as the document date, but may be different depending on your accounting practices. For example, if you calculate sales tax on 04/01, but don't commit the transaction to AvaTax Update until 05/01, the tax date and document date will differ and the tax rates could have changed.|
|Document Date||The date the transaction is finalized and committed to AvaTax Update. Usually the same as the tax date, but may be different depending on your accounting practices. For example, if you calculate sales tax on 04/01, but don't commit the transaction to AvaTax Update until 05/01, the tax date and document date will differ and the tax rates could have changed.|
|Status||A label to indicate the reporting status of the transaction. Committed transactions are included in all reports and returns filed by Avalara while uncommitted and voided transactions aren't included.|