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Manage Taxability of Products and Services

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 rulesHoverTT.png 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 an item to a tax code

  • 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.
How Do I Map Tax Codes - Final.png

  1. In Microsoft Dynamics AX 2012, go to Avalara AvaTax > Setup > Configuration Setting > General > General Options tab.
  2. Select Tax Mapping Code and then click the Tax Code Mapping button that appears.

    MAX - 2012 - taxability code mapping 1.png

  3. In the Tax Code Mapping window, map your item to a tax code:
    1. Select one of the following Document Type:
      • Item
      • Fee
      • Hour
      • Expense
      • Project Item
      • Ledger Account
      • Procurement Category
    2. Select the Item/Category/Account as applicable.
    3. Type the Taxability Code. This code can be an Avalara tax code or a custom tax code.
    4. Click Close.
  4. Click Save.

Update items mapped to tax codes via an Excel Add-in import

Update items and categories mapped to Avalara tax code in an Excel worksheet and synchronized with the AVA_TaxCodeMapping table using the Excel Add-in for Microsoft Dynamics AX 2012. The following procedure establishes the connection between the table and the Excel add-in. Once this connection is established, any updates made to the table or the Excel sheet can be synchronized. 

Establish the connection for mapping items to tax codes

  1. Ensure that your system administrator has installed the Microsoft Excel Add-ins for Microsoft Dynamics AX. If the add-in is installed, a Dynamics AX tab is added to the ribbon in Excel.  
  2. Create an Avalara AIF web service based on the AVA_TaxCodeMapping query called AVA_TaxCodeMappingService:
    1. Go to AOT > Tools > Wizards > AIF Document Service Wizard.
    2. In Select document parameters, add the following details, and then click Next.
      • Query: Select AVA_TaxCodeMapping.
      • Documentation identification: Type the Document name as AVA_TaxCodeMapping.
    3. In Select code generation parameters, add the following details, and then click Next.
      • Service class name: Type AVA_TaxCodeMappingService.
      • Document object class name: Type AVA_TaxCodeMapping.
      • Axd class name: Type AxdAVA_TaxCodeMapping.
      • Service operations: Select read and update.
    4. Click Generate. On successful completion, this creates AVA_TaxCodeMappingService class in the class library. 
  3. Go to AOT > Queries > AVA_TaxCodeMapping > Data Sources. Right-click AVA_TaxCodeMapping_1(AVA_TaxCodeMapping) and ensure that the Properties > Update value is Yes
  4. Create a new document data source in Microsoft Dynamics AX called AVA_TaxCodeMappingService:
    1. Go to Organization Administration > Setup > Document Management > Document Data Sources.
    2. Click New. Add the following details, and then click Activate.
      • Module: Select General.
      • Data source type: Select Service.
      • Data source name: Type the service class name as AVA_TaxCodeMappingService.
      • Activated: Select to activate this data source.
      • Description: Type the description for this data source.
  5. Assign object-level security to the users importing data using Excel Add-in:
    1. Go to System Administration > Setup > Security roles
    2. Select the role, and then click Override permissions. (eg: AvaTax role) 
    3. In Override permissions
      • Click Tables/Fields > AVA_TaxCodeMapping.  Ensure that the Do not override option isn't selected. For Override access level, select Full control
      • Click Server methods > AVA_TAXCODEMAPPINGSERVICE.CREATE.  For Override access level, select Full control

Update data using Excel worksheet 

Once you establish a connection with Excel and Microsoft Dynamics AX, add data to your Excel spreadsheet.

  1. Go to Microsoft Excel > Blank Workbook.
  2. In the Excel worksheet, go to Dynamics AX, and then click Add Data.
  3. In Add Data, select AVA_TaxCodeMapping as the data source you wish to use in the document, and then click Ok.
  4. Review and verify the data added in the Excel worksheet. 
  5. Click Publish to import the changes made in the Excel worksheet to the table. Your Excel worksheet and the AVA_TaxCodeMapping table are now synchronized.  

Map an item to UPC

For an item, you can choose to send the model number or the UPC (Universal Product Code) from your accounting software to AvaTax. If the UPC isn't available, the model number is set as the default and sent to AvaTax.

To customize taxability for specific products, tax codesHoverTT.png need to be mapped to UPCs, and model numbers. Items that aren't mapped to tax codes are treated as Tangible Personal Property (TPP), and are fully taxed during calculation. 

Map an item to UPC

To send an UPC to AvaTax, ensure that Use UPC as Item Code option is enabled in AvaTax for Microsoft Dynamics AX 2012 configuration. To map UPC, follow these steps:

  1. Log in to AvaTax for Microsoft Dynamics AX 2012.
  2. Go to Product Information Management > Common > Released products and select the item that you want to set to UPC and double-click on the row to open the item details.

    AX_SO.png

  3. In the Item page, go to Manage Inventory > Warehouse and click GTIN codes button.

    AX GTIN button Path1.png

  4. In the Item GTIN Codes page, add the UPC (also called as GTIN codes) details for this item.  

    AX Assign GTTN.png

  5. Close the GTIN Codes page.
  6. Go to Accounts Receivable > Common > Sales Orders > All Sales Orders.
  7. In the All Sales Orders page, go to Sales Order > New and then click the Sales Order button. In the Create Sales Order page, select the Customer Account and click OK.

    AX Create SO.png

  8. In the Sales Order page, in the Item Number column for the item, type the UPC/GTIN.

    AX_SO.png

  9. Go to Sell > Tax and click the Sales Tax button.  

    AX Sales tax button Tab.png

  10. In the Sales Tax window, the table displays sales tax details.
  11. Close the Sales Tax window,
  12. In the Sales Order window, go to the Invoice tab > General > Invoice button to create an invoice for the sales order. 

    AX Invoice Button Tab.png

  13. Click OK to post the invoice to AvaTax.

Map product classes to a tax code

Product class item mapping refers to the ability to link a single tax code to a collection of item numbers or SKU’s within an ERP system. The benefit of being able to use product class item mapping is that you can assign one code to tens, hundreds, or thousands of SKU’s in a single instance, which is ideal for companies that have an extensive product catalog. Another benefit is that you can readily monitor and keep track of your item master list within the ERP system without having to maintain an item mapping matrix outside of your item master list.

Exceptions & considerations for product class item mapping

If you're a SST (Streamlined Sales Tax) returns customer you need to run your configuration options by your GoLive Implementation Consultant. There are specific product description requirements which may not allow you the option to use product class item mapping.

Mapping within the Admin Console always supersedes item mapping within an accounting software or ERP system.

If you have multiple AvaTax integrations, such as an ERP system and an Ecommerce platform, you need to verify that item mapping is consistent between the two platforms. Items within an ERP system are often categorized without sales tax in mind which can lead to confusion and miscalculations when product class mapping is applied.

Let’s use the example of a clothing company:  

Within their ERP system they have categories for pants, shirts, accessories, and shoes. These categories are set up with the order fulfillment center and used to help track and maintain inventory. For the AvaTax integration this company has decided they want to utilize the product class mapping feature available to their ERP system which will allow them to map by several items at a time instead of mapping to each individual item. This will help them calculate the appropriate sales tax for the hundreds of varieties of shoes they sell. The first thought in regards to mapping the shoe category is to use tax code PC040144 which is for shoes and shoe laces. One easy to manage tax code for their entire assortment of shoes, which sounds great! Let’s then take into consideration that out of the different varieties they sell they offer ballet & tap shoes. In this instance they may run into taxability issues as ballet & tap shoes may not be classified as clothing items depending on which states are involved. In fact, AvaTax offers the system tax code of PC040401 specifically for ballet & tap shoes. From here this company has additional configuration options to consider.

Map tax codes to a product class

The Tax Code Mapping utility in AvaTax for Microsoft Dynamics AX lets you look up and select tax codes and map them to items. There are two ways to map one tax code to a collection of items.

To map tax to items, follow one of these two steps:

  1. Option 1:
    1. Open AvaTax for Microsoft Dynamics AX.
    2. Navigate to Administration.
    3. Locate AvaTax.
    4. Click + in front of Setup.
    5. Click Configuration Settings.
    6. Select the General tab.
    7. Click Tax Code Mapping. Follow these steps in the form:
      1. Click in the grid.
      2. Add new:
        • Click New icon,
        • Press Ctrl+N, or
        • Click File and select New.

          AX-product item class mapping.png

      3. In the Document Type column, click the menu and scroll through the list of Types you can map to. Select the desired type.

      4. In the Item/Category/Account column, click the menu and select the appropriate Category you want to map.

      5. In the Taxability column, enter the AvaTax code you want to use. You can find the  tax codes list here.

      6. Click the Save icon.

    8.        Exit the form.

    9. Exit Configuration.

  2. Option 2:
    1. Open AvaTax for Microsoft Dynamics AX.
    2. Navigate to Administration.
    3. Locate AvaTax.
    4. Click + in front of Utilities.
    5. Click Tax Code Mapping.
      1. Click in the grid.
      2. Add new:
        • Click New icon,
        • Press Ctrl+N, or
        • Click File and select New.

          AX-product item class mapping.png
      3. In the Document Type column, click the menu and scroll through the list of Types you can map to. Select the desired type.
      4. In the Item/Category/Account column, click the menu and select the appropriate Category you want to map.
      5. In the Taxability column, enter the AvaTax code you want to use. You can find the  tax codes list here.
      6. Click the Save icon.
    6. Exit the form.
    7. Exit Configuration.