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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 system tax codes with a taxability profile in place for all US states. Or, create your own custom tax codes and tax rulesHoverTT.png in the Admin Console. Keep in mind that Avalara updates system 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 group code

This is the common item-mapping method in AvaTax for Microsoft Dynamics NAV. 

  • 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. To learn more about tax codes and how to use them, read what is a tax code? 
  • 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 system.
  • 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 the Admin Console.
  • If you map in your accounting software and the Admin Console, the Admin Console mapping supersedes any mapping in your accounting software.
How Do I Map Tax Codes - Final.png
  1. In Microsoft Dynamics NAV on the left pane, click Home, click Departments, and then click Financial Management.
  2. On the right pane under Choose by department, click General Ledger.
  3. Under Lists, click Chart of Accounts.
  4. Double-click the account that you want to change.
  5. Expand the Posting pane, and next to the Tax Group Code field, assign the tax group code.
  6. Click OK.

    NAV-Taxgroupcode.png

Map items to taxability mapping utility

Use the taxability code mapping utility to map types of items to tax codes.

  1. In Microsoft Dynamics NAV, go to Departments > Avalara AvaTax > Utilities and click Taxability Code Mapping.
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  2. 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.
  3. Click Ok.

Map 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 is not 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. Avalara has other ways to help with product taxability, including AvaTax System tax codes and UPC content.

Using this feature may cause additional fees. Talk to your Customer Account Manager (CAM) for more information.

  1. Log in to Microsoft Dynamics NAV.
  2. 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. 
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  3. To map an UPC to an item, follow these steps:
    1. Go to Departments > AvaTax > Utilities > Item UPC Code Mapping to map the UPC to an item.
    2. On the Item UPC Code Mapping page, type the required information to map the UPC to an item. 

      ItemUPCCode Mapping.png

  4. To use an UPC instead of the item code, follow these steps:
    1. Go to Departments > Sales and Marketing > Order Processing > Sales Order and click New.  
    2. On the Sales Order page, select the Sell-to Customer No.
      NewSalesOrder.png
    3. In the Lines section, create a new transaction and then click Statistics.
    4. Click Post to post this transaction to the Admin Console.
    5. Go to the Admin Console to view the transaction.
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