Apply tax codes to manage item taxability. Assigning product and product categories to items gives you important jurisdictional subtlety in taxability. Avalara has predefined Avalara tax codes with a taxability profile in place for all US states. Or, create your own custom tax codes and tax rules in AvaTax. Keep in mind that Avalara updates Avalara tax codes when taxability rules change, but custom tax codes and rules are maintained by you; they're not updated when tax laws change. Also, make sure you enable nexus in the jurisdictions where you're required to register and collect tax so AvaTax calculates the full tax amount.
Map items to tax codes
- A tax code is a unique code for similar products, services, or charges that tells AvaTax what kind of sales tax, if any, to charge for them.
- It's a best practice to map items to tax codes in your accounting software. Find your integration to learn how to map tax codes in your accounting software.
- If you can't pass a tax code from the item management screen, or if you need a remotely-hosted mapping system to accommodate multiple integrations, map the items to tax codes in AvaTax.
- If you map in your accounting software and AvaTax, the AvaTax mapping supersedes any mapping in your accounting software.
- On the Sales menu, point to Tax, and then click Product Tax Classes.
- Click Add New.
- In the Product Tax Class Information dialog box, in the Class Name box, type a name for the tax class.
- In the AvaTax Code box, type a tax code.
- Verify your tax class is in the List of Tax Classes.
- On the Catalog menu, click Manage Products.
- Click on the item in the list or click Add Products to add an item.
- On the left, click General.
- In the Tax Class list, select the tax class you created and then click Save.