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Install and Configure Avalara AvaTax for Microsoft Dynamics 365 for Finance and Operations

After you activate AvaTax and set up your company profile, install and configure AvaTax for your accounting software. During configuration, customize your setup to fit your unique business needs for things like:

  • Tax calculation settings for various tax types
  • Exemption settings if you have exempt customers
  • Product taxability settings

Update these settings when your business needs change.

We recommend you contact Avalara Professional Services before you install and configure AvaTax for your accounting software for help with implementation.

Download AvaTax Update for your accounting software

Download your integration software to connect your accounting software to AvaTax Update. 

  1. In Avalara Account, go to Settings > Manage account, and then click Get your connector.
  2. Click the link of the connector you want to install, and then save the .zip file somewhere on your computer that's easy to find.
  3. Right-click the .zip file and extract the contents. 

Install AvaTax Update for your accounting software

There are multiple ways to install AvaTax Update for Microsoft Dynamics 365 for Finance and Operations.

  • Deployment using model files is the preferred installation method, and is typically used when deploying AvaTax Update to a development environment.
  • Deployment using a deployable package (manually or using Lifecycle Services):
    • Is rarely used for development environments, but is recommended for a multi-ISV solution environment.
    • Is recommended when deploying AvaTax Update in staging or production environments, with the assumption that all UAT is done and there aren't any errors.
    • Is recommended for deploying to a multi-ISV solution environment. We recommend testing AvaTax Update in a UAT/sandbox environment with your other ISV software before deploying to a production environment.

To install AvaTax Update for Microsoft Dynamics 365 for Finance and Operations using model files:

  1. To import the model file using the ModelUtil.exe utility:
    1. Run Command Prompt as an Admnistrator, and navigate to the Bin folder in the Packages directory (typically C:\Packages\Bin or C:\AosService\PackagesLocalDirectory\Bin).
    2. Execute the following:ModelUtil.exe -import -metadatastorepath=[path of the metadata store where model should be imported] -file=[full path of the file to import]
      For example: ModelUtil.exe -import -metadatastorepath="C:\AOSService\PackagesLocalDirectory" -file="C:\Temp\AVA Model-Avalara, Inc..axmodel
  2. Build the imported models in Visual Studio.
  3. Synchronize the database in Visual Studio.

Set up AvaTax Update for your accounting software

To set up AvaTax Update for Microsoft Dynamics 365 for Finance and Operations:

  1. Log in to Microsoft Dynamics 365 for Finance and Operations and go to Avalara AvaTax > Setup > AvaTax Setup Assistant.
  2. On the Avalara account credentials page, fill in the following, and then click Verify Credentials:
    Field Action
    • Account Number
    • License Key
    Use the information provided in an email from Avalara (sent to the email account you used to activate your account). It must match what's saved in AvaTax Update.
    • Username 
    • Password 
    Use the information provided in an email from Avalara (sent to the email account you used to activate your account). It's the same credentials you use to log in to AvaTax Update.
    Service URL Select Development if you have an AvaTax Update development account or Production if you have an AvaTax Update production account.
  3. In Company Code, type the company code you created when you activated your AvaTax Update account, and then click Next.
  4. To use AvaTax Update to calculate tax on transactions, on the Map Sales Tax Group page, complete the following, and then click Next
    1. Next to Sales tax group, select AVATAX.
    2. Optional: To update the sales tax group, click Tax Group Code Mass Update, and then select the Customer/Vendor, Sales tax group, and Range.
  5. On the Enable Address Validation page, select the countries for which you want address validationHoverTT.png enabled (available in US and Canada), and then click Next. If you disable address validation, AvaTax Update uses the customer's ship-to address as entered to calculate the correct sales tax. Sales tax might be calculated incorrectly if this option is disabled.
  6. Click Test Calculating Tax, and then click Finish. If you receive an error message, verify your credentials and try again.
     

Set up sales tax accounts

To set up sales tax accounts:

  1. Go to Tax > Setup > Sales tax > Ledger posting groups. Choose the correct Sales Tax Accounts to use with AvaTax Update.
  2. Refresh any workstation that was open while running the Setup Assistant to ensure it's updated with the most current AvaTax Update configuration settings.

Configure AvaTax Update for your accounting software

To configure your company settings:

  1. Go to Avalara AvaTax > Setup > Configuration Setting.
  2. On the Avalara account credentials tab, click Edit Settings to add or modify the following information, and then click Verify Credentials. You must supply the AvaTax Update license key to verify your credentials.
    Field Action
    • Account Number
    • License Key
    Use the information provided in an email from Avalara (sent to the email account you used to activate your account). It must match what's saved in AvaTax Update.
    URL Use the information provided in an email from Avalara (sent to the email account you used to activate your account). It's the same credentials you use to log in to AvaTax Update.
    Company Code Every accounting software that works with AvaTax Update uses a company code to identify itself to AvaTax Update. Select the company code that you created in AvaTax Update from the list.
  3. Complete or modify fields on the remaining tabs, using the following information, and then click Save:
    • The General tab:
      Section Field and Description
      General Options
      • Display all warning messages: If not selected, you see only error messages.
      • Tax Mapping Code: Enable to map items to Avalara tax codes to account for varying taxability of products and services. Note: Item Tax Code Mapping takes precedence over Item Tax Class Mapping.
      • User Defined 1: Select the type of data you want to send to AvaTax Update.
      • User Defined 2: Select the type of data you want to send to AvaTax Update.
      • Enable Entity Use Code: Enable to map entity/use codes for your customer addresses to flag them as exempt from sales tax.
      • Send Item account to AvaTax: Select to send general-ledger account information for an item to AvaTax Update.
      • Use UPC as Item Code: Select to send a UPC instead of an item code to AvaTax Update. Using this feature may trigger additional fees. Talk to your Customer Account Manager (CAM) for more information.
      Return Order Address Return Order Address: Select the address you want to use for sales tax calculation of return orders and credit memos.
      Shipment Options Choose shipment details. Control the assignment of tax codes to additional charge items. Available additional charge items display in the table on the left and can be assigned to tax codes associated with freight or miscellaneous charge references found on the right side of the page.
      Adapter Options
      • Request Timeout (In seconds): Enter the length of time to wait for AvaTax Update to respond to calculation requests. We recommend that you don't adjust this setting.
      • Enable logging: This function is primarily used for troubleshooting issues. If you choose to enable logging, all success, warning, and error messages are included in the log. Only enable logging if you've been instructed to do so by Avalara Support because it can significantly slow down your service.

       

    • The Tax Calculation tab:
      Section Field and Description
      General Options
      • Disable Tax calculation: If you choose to disable tax calculation, your accounting software no longer uses AvaTax to calculate tax on transactions.
      • Always check address before calculating tax: Select to force an address validation of the sales/billing document prior to tax calculation.Generally recommended to enable this option if you enter ship-to address on-the-fly during the Microsoft Dynamics 365 for Finance and Operations sales transaction entry process.
      • Enable credit note / return order tax override: Generally recommended to enable this option if you want to override the tax details for a credit note / return order.
      Tax Area Code
      • Sales tax group: Select the default sales tax group. The AVATAX sales tax group is suggested.
      • Tax Group Code Mass Update: Accesses a utility to perform a mass updates of the sales tax group code on a range of customers.

       

    • The Address Validation tab:
      Section Field and Description
      General Options
      • Disable Address Validation: If you disable address validation, AvaTax Update uses the customer's ship-to address as entered to calculate the correct sales tax. Sales tax might be calculated incorrectly if this option is disabled.
      • Return Results in Uppercase: Select to save all address validation results in uppercase format.
      Perform Address Validation based on country names selected Select the specific countries in which AvaTax Update will validate addresses. These names are retrieved from your transaction records. AvaTax Update only validates addresses in the United States and Canada.
      Other Options Reset: Clears the Address Validated flag. Previously verified addresses are no longer recognized as validated.

       

    • The Consumer Use Tax tab:
      Section Field and Description
      Consumer Use Tax Enable use tax assessment on vendor invoice: If enabled, your accounting software uses AvaTax Update to calculate consumer use tax on vendor consumer use tax transactions.
      Posting account 
      • Use tax liability account: If enabled, your accounting software uses AvaTax Update to calculate consumer use tax on vendor consumer use tax transactions.
      • GL Account to Debit: Select a relevant account from the drop-down list.
      • Use Tax Debit GL Account: Select a relevant account from the drop-down list.
      • Use tax journal name: Select a relevant account from the drop-down list.
      Taxability
      • Apply Avalara Goods and Service code mapped on item group when it's not available on an item: Select to send the item group details for an item.
      • Apply Avalara Goods and Service Code mapped on: Select the item.

       

    • The Project tab:
      Section Field and Description
      Project Invoice Address Project Invoice Address: Select the appropriate project address for your invoice.
      Tax Calculate Calculate Tax on Advance: To calculate tax on advance payment transactions, toggle to Yes.