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 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 an item to a tax code
- In Microsoft Dynamics NAV on the left pane, click Home, click Departments, and then click Financial Management.
- On the right pane under Choose by department, click General Ledger.
- Under Lists, click Chart of Accounts.
- Double-click the account that you want to change.
- Expand the Posting pane, and next to the Tax Group Code field, assign the tax group code.
- Click OK.
Map multiple items to tax codes
Use the taxability code mapping utility to map types of items to tax codes.
- In Microsoft Dynamics NAV, go to Departments > Avalara AvaTax > Utilities and click Taxability Code Mapping.
- On the Taxability Code Mapping page, add the following details:
- Type: Select the Type.
- No.: Select the number that you want to map from the list.
- AvaTax Taxability Code: Type either the AvaTax Update System Tax Code you want to use or the custom tax code you created.
- Click Ok.
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.
- Log in to Microsoft Dynamics NAV.
- Go to Departments > AvaTax > Setup > AvaTax Configuration > Tax Calculation tab and ensure that the Use UPC as Item Code option is enabled. If this option is enabled, the UPC is sent to AvaTax Update if it is defined for an item. If this option is disabled, even if the UPC code is defined for a item, the item code is sent to AvaTax Update.
- To map an UPC to an item, follow these steps:
- Go to Departments > AvaTax > Utilities > Item UPC Code Mapping to map the UPC to an item.
- On the Item UPC Code Mapping page, type the required information to map the UPC to an item.
- To use an UPC instead of the item code, follow these steps:
- Go to Departments > Sales and Marketing > Order Processing > Sales Order and click New.
- On the Sales Order page, select the Sell-to Customer No.
- In the Lines section, create a new transaction and then click Statistics.
- Click Post to post this transaction to AvaTax Update.