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Install and Configure Avalara AvaTax for Microsoft Dynamics 365 for Finance and Operations, Business Edition

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

Alter these settings when your business needs change.

Download AvaTax for Microsoft Dynamics 365 for Finance and Operations, Business edition

To connect your accounting software to AvaTax, download your integration software. 

  1. In AvaTax, on the Home tab, click Get Started.
  2. In the Download and Install Your Integration Software section, click Download Software
  3. In the Download Your AvaTax Connector Software window, click the arrow next to the name of your software, and then download the latest version of your integration. If the file isn't available for download, clear your browser's cache, and log back into AvaTax.
  4. Save the .zip file somewhere on your computer that's easy to find.
  5. Right-click the .zip file and extract the installation folder or file (.exe or .pdf or .msi). 

Install

It's recommended to contact Avalara Professional Services before you install and configure AvaTax for your accounting software.

Setup

Set up AvaTax for Microsoft Dynamics 365 for Finance and Operations, Business edition.

  1. Log in to Microsoft Dynamics 365 for Finance and Operations, Business edition and search for AvaTax Setup, and then click Avalara AvaTax Setup Assistant.
  2. Click Enter your Avalara Credentials and Company Code. On the Account Credentials page, click Edit, complete the following steps to establish a connection with AvaTax, and then click Close:
    1. Type the Account Number and associated License Key you received in an email from Avalara. You used this email to activate your AvaTax account. Select whether the Web Service URL is for a Production or Development account, and then click Verify Credentials.    
    2. In Company List, select the company code that you created when you activated your AvaTax account.
  3. To assign AvaTax as the tax-calculation method for your customers, click Map General Leger Account(s) to AvaTax Tax Area Code. On the Tax Area Code page, complete the following steps and then click Close
    1. Select AVATAX as the Tax Area Code.
    2. In Set G/L accounts in Tax Juris..., select the general ledger account you want to use for items you sell.
    3. To assign the AvaTax sales tax group code to a range of customers, use the Set Tax Schedule ID Utility.
  4. To set up address validation for accurate tax calculation, click Enable Address Validation for USA and Canada.
  5. Click Test Calculating Tax. If you see a message that says "Congratulations! You are connected to AvaTax," go to the next step. If you see any other message, try these steps again. Once you're finished, make changes or access other settings (such as address validation, product taxability, and entity/use codes) in the AvaTax Configuration window.

Configure

After you've setup AvaTax for Microsoft Dynamics 365 for Finance and Operations, Business edition, configure your company settings.

  1. Log in to Microsoft Dynamics 365 for Finance and Operations, Business edition and search for AvaTax Configuration, and then click Avalara AvaTax Configuration.
  2. The Account Credentials tab:
    1. Click Edit Settings to add or modify the following information.
      Account Number: You received your AvaTax account number from Avalara in an email when you signed up for your AvaTax account. The subject of that email is, Important! Your AvaTax Production Account Number & License Key.
      License Key: You received your AvaTax license key in the same email as your account number when you signed up for your AvaTax account.
      Web Service URL: If you have an AvaTax production account, use Production. If you have an AvaTax development account, use Development.
      Company Code: This is the code you entered when you activated your AvaTax account. When you install AvaTax for Microsoft Dynamics 365 for Finance and Operations, Business edition and validate your AvaTax credentials, the company code you created in AvaTax is sent to Microsoft Dynamics 365 for Finance and Operations, Business edition.
    2. Click Verify Credentials to verify the added or updated account credentials. You must supply the AvaTax license key to verify your credentials.
  3. The General tab:
    Display all warning messages: Select this checkbox to display tax warning messages from AvaTax. Error messages, however, are always displayed.
    Tax Mapping Code: Controls how tax codes are assigned to items. Selecting the check box enables the tax code mapping utility in the AvaTax menu.
    User Defined 1: Select to send non-tax data to AvaTax. Examples of this data are in the menu list.
    User Defined 2: Select to send non-tax data to AvaTax. Examples of this data are in the menu list.
    Send Item account to AvaTax: Select this checkbox to send the general-ledger account information for an item to AvaTax.
    Update Default Data: On this menu, select your Country Code.
  4. The Tax Calculation tab:

    Disable Tax Calculation: If you choose to disable tax calculation, Microsoft Dynamics 365 for Finance and Operations, Business edition no longer uses AvaTax to calculate tax on transactions..

    Always Check Address Before Calculating Tax: Generally recommended to enable this option if you enter ship-to address on-the-fly during the Microsoft Dynamics 365 for Finance and Operations, Business edition sales transaction entry process; this option forces an address validation of the sales/billing document prior to tax calculation.
    Show AvaTax Tax Details Before Sales Statistics Window:  Select this checkbox to view the AvaTax calculated sales tax details before it shows in the sales statistics page.
    Use UPC as Item Code: Select this checkbox to send a UPC instead of an item code to AvaTax. Using this feature may trigger additional fees. Talk to your Customer Account Manager (CAM) for more information.
    Enable Tax Amount Adjustment: Leave at default setting unless you want to  add a SALESTAXADJUST line item for sales credit memos and service credit memos. 
     Exempt Processing: Leave at the default setting. 
    • Sell-to Customer: This is the default setting and if selected, the exemption processing is based on the sell-to customer exemption details.
    • Bill-to Customer: If selected, the exemption processing is based on the bill-to customer exemption details.
    Enable Entity Use Code: Select this checkbox to exempt customers from sales tax with entity/use codes.

    Tax Area Code: Identifies the default sales tax group. Select AVATAX to use AvaTax as the tax calculation method.

    At Order Release: Leave at default setting.
    • Quantity (Order): This is the default setting and if selected, the quantity for the order is considered for calculating sales tax.
    • Quantity (Ship): If selected, the ship-to quantity is considered for calculating sales tax instead of the order quantity.
    • Quantity (Invoice): If selected, the invoice quantity is considered for calculating sales tax instead of the order quantity.  
    At F7 Statistics: Select one of these options to display statistics about it when you press Statistics.
    Return Address: Select the address you want to use for return orders and credit memos from this list:
    • Shipping: This is the most common selection and uses the ship-to address.
    • Customer: This selection uses the bill-to address.
    • Invoicing: This selection uses the location code address.
    Enable Asynchronous AvaTax Posting:
    • If this option is disabled, the transactions are posted synchronously. During the posting operation, AvaTax calculates sales tax and then posts the transaction to both Microsoft Dynamics 365 for Finance and Operations, Business edition and AvaTax. After the posting, the Doc Status of this transaction is shown as Committed in AvaTax. 
    • If this option is enabled, the transactions are posted asynchronously. During the posting operation, AvaTax calculates sales tax and then posts the transaction to Microsoft Dynamics 365 for Finance and Operations, Business edition. The Doc Status of the transaction is shown as Uncommitted in AvaTax. To post the transaction to AvaTax, use the Asynchronous Posting utility. After you run this utility, the Doc Status of this transaction is shown as Committed  in AvaTax. 

    Enable COGS: Leave at the default setting so you can choose the Tax Area Code for COGS (Cost of Goods Sold). 

    • If the selected Tax Area Code for COGS is the same as the line tax group code of the transaction, then the tax is calculated based on the unit cost (instead of the unit price) specified on the item card. 
    • If the selected Tax Area Code for COGS is not the same as the line tax group code of the transaction, then the tax is calculated based on the unit price specified on the item card.  

    Use Tax Assessment:

    • Enable Use Tax Assessment: If enabled, Microsoft Dynamics 365 for Finance and Operations, Business edition uses AvaTax to calculate consumer use tax on vendor use tax transactions.
    • Credit GL Account: Select a relevant account from the drop-down list.
    • Debit Account Options: Select the type of account from which the accrual amount is to be debited. 
    • Debit GL Account: Select a relevant account from the drop-down list.
    • Gen. Journal Batch Name: Select a relevant account from the drop-down list.
    Initiate AvaTax based on Tax Area Code: Select this checkbox to use AvaTax to calculate sales tax using the tax area code in a sales or a billing transaction.
    Initiate AvaTax based on the Country Code: If you choose to use the country code, the Tax Area Code and the Tax Group Code in sales or a billing transaction are ignored.
  5. The Address Validation tab:

    Disable Address Validation: If you choose to disable address validation, Microsoft Dynamics 365 for Finance and Operations, Business edition no longer uses AvaTax to validate addresses on transactions.

    Return Results in Uppercase: Address validation results are returned in uppercase format.
    Abort Batch Posting with Errors: Select this checkbox to stop the address validation, using the Batch Address Validation utility, if it encounters an error.
    During Batch Address Validation, continue processing regardless of errors: Select this checkbox to continue address validation, using the Batch Address Validation utility, even after it encounters an error.
    Scan, Accept and Report Validated Address during Batch Address Validation manually: Click this checkbox to manually accept addresses validated using the Batch Address Validation utility.
    Country Codes Mapping for Address Validation: Select the countries to make AvaTax validate addresses in that country. (AvaTax validates addresses only in the United States and Canada.)
  6. When you finish making changes to your AvaTax for Microsoft Dynamics 365 for Finance and Operations, Business edition configuration, click Close.