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 Update 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
Map items to Avalara tax codes, and when your accounting software processes transactions, or when you upload the transactions to AvaTax Update, AvaTax Update determines the taxability for the items you sell based on the rules behind these Avalara tax codes. Find the codes you need using the online Tax Code Search Tool.
You can map items to Avalara tax codes in your accounting software or in AvaTax Update. Usually, mapping them in your accounting software works better and takes less time. 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 Update.
To learn how to map Avalara tax codes in your accounting software, check your accounting software configuration documentation. To map items to Avalara tax codes in AvaTax Update, go to Settings > Manage Items With Special Tax Treatment.
Keep in mind that Avalara updates Avalara tax codes when taxability rules and laws change, but any custom tax codes and rules you create 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 both your accounting software and in AvaTax Update, the mapping in AvaTax Update overrides any mapping in your accounting software.
Map Avalara tax codes to items and product classes in AvaTax Update for Microsoft Dynamics GP
Before you map items to Avalara tax codes, make sure you:
- Enable item class mapping when you install and configure AvaTax Update for Microsoft Dynamics GP
- Select Taxability from the Item Class Mapping and Tax Code Mapping drop-down menus
If both an individual item and the class it belongs to are mapped to an Avalara tax code, AvaTax Update for Microsoft Dynamics GP uses the tax code mapped to the item. This lets you set up mixed taxability in an item class.
Map a tax code to an item in AvaTax Update for Microsoft Dynamics GP
To map a tax code to an item:
- Select an item from your inventory in Microsoft Dynamics GP. The Item Maintenance Options dialog box opens.
- Under Category, in Taxability, type either the Avalara tax code or a custom tax code for the item, and then click Ok.
Map a tax code to a product class in AvaTax Update for Microsoft Dynamics GP
To map a tax code to a product class:
- To find the Avalara tax code, use our Tax Code Search.
- In Microsoft Dynamics GP, go to Cards > Inventory > Item.
- Click Class ID, and then click Option.
- Under Category, in Taxability, type the tax code for the product class.
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 Update. If the UPC isn't available, the model number is set as the default and sent to AvaTax Update. To customize taxability for specific products, items need to be mapped to UPCs and model numbers.
To map a UPC to an item:
- In Microsoft Dynamics GP, go to Microsoft Dynamics GP > Tools > Utilities > Avalara AvaTax > Update, and then click AvaTax Item UPC Mapping.
- In the AvaTax UPC Code Mapping window, use Item Number From and Item Number To to select the range of items, and then click Redisplay to show the items you selected.
- Select an item, and then add the item UPC.