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 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 tax codes
The process is simple. Map items to Avalara tax codes, and when your accounting software processes transactions or when you upload the transactions to AvaTax, AvaTax determines the taxability for the items you sell based on the rules behind these Avalara tax codes. For more information about Avalara tax codes, see Select Avalara Tax Codes.
Avalara recommends you map items to Avalara tax codes in your accounting software. To learn how to map Avalara tax codes in your accounting software, check your accounting software documentation. See our handy chart for a little guidance deciding whether you should map items to Avalara tax codes in your accounting software or in AvaTax.
Keep in mind that Avalara updates Avalara tax codes when taxability rules and laws change, but you have to maintain your own custom tax codes and rules; these 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 UPCs (universal product codes), you don't need to use Avalara tax codes because UPCs already have taxability rules associated with them.
If you map in your accounting software and in AvaTax, the mapping in AvaTax overrides any mapping in your accounting software.
Map an item to a tax group 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 System Tax Code you want to use or the custom tax code you created.
- Click Ok.
Map item to UPC
Instead of using Avalara tax codes, 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, 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 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.
- 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.