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Manage Taxability of Products and Services

This article applies to:Avalara AvaTax for NetSuite

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 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.
How Do I Map Tax Codes - Final.png

Configure to map items to tax codes

Before you map an item to a tax code, ensure the AvaTax Tax Code option is displayed. If this option isn't visible, follow these steps:

  1. In NetSuite, go to Customization > Forms > Entry Forms.
  2. Select the appropriate Entry Form from the list and click Edit next to the form name. For example, if you're importing inventory items, select Edit next to Custom Inventory Part Form. The name could be different based on the form you're using or any customizations.
  3. Select the Fields tab, and then select the Custom subtab.
  4. Find AvaTax Tax Code, and then select the checkbox in the Show column.
  5. Save the record.

Import a spreadsheet (CSV file) into NetSuite

The fastest way to map many products and services to tax codes is to use the NetSuite Import Assistant to import a comma-separated values (CSV) list of items and their tax codes.

  1. Download the CSV import template from importing tax items, or use a spreadsheet program to create and export a worksheet in CSV format that contains only three columns with headers spelled exactly as shown below:
    • Item: A unique identifier for the product, service, or charge (up to 50 characters long)
    • ItemDescription: A comment for the item tax code that describes the product, service, or charge (up to 255 characters long)
    • TaxCode: An Avalara tax code or a custom tax code that indicates the category of product, service, or charge
  2. In NetSuite, go to Setup > Import/Export > Import CSV Records.
  3. In the Welcome to the Import Assistant dialog box, click Get Started!
  4. On the Import Assistant page, under Scan & Upload CSV Files, follow these steps:
    1. Under IMPORT TYPE, select Items.
    2. Select the RECORD TYPE.
    3. Under CHARACTER ENCODING, select Western (Windows 1252).
    4. Under CSV File(s), click ONE FILE TO UPLOAD.
    5. Click Select. In the File Upload window, navigate to and select your CSV file, and then click Open.
    6. Click Next.
  5. On the Import Assistant page, under Import Options, if you want to add new items and codes, click Add. If you want to update existing items with new codes, click Update. Then, click Next.
  6. On the Import Assistant page, under Field Mapping, follow these steps:
    1. Map the Name field from your CSV file to Item Name/Number.
    2. Map the Tax Code field from your CSV file to AvaTax TaxCode.
    3. Click Next.

      NetSuite2014_MapItemsImportCSVs4.png
  7. On the Save Mapping & Start Import page, type the Import Map Name and a Description.
  8. Click Save & Run.

Map multiple items to tax codes

Use the mass updates feature in NetSuite to map similar groups of items instead of your entire list of items. To use this feature, follow these steps:

  1. In NetSuite, go to Lists > Mass Update > Mass Updates.
  2. On the Mass Updates page, click General Updates.
  3. Under Items, select the item type that you want to update.
  4. On the Mass Update page, under FILTER, select AvaTax Taxcode (Custom).

    NetSuite2014_MapItemsEnMasse2.png
  5. In the Mass Update dialog box, under AVATAX TAXCODE, select your search parameters. In the text box next to it, type a value, and then click Set.
  6. Click Mass Update Fields, and in the Mass Update Fields pane next to AvaTax Taxcode, type a tax code.
  7. Click Preview to view the potential results of the mass update. If you're satisfied, click Perform Update. When the update is complete, verify the results for accuracy.

Map items to tax codes in NetSuite

Follow these steps to map codes to items one at a time:

  1. In NetSuite, go to Lists > Accounting > Items.
  2. Select the appropriate item from the list and click Edit
  3. On the item page, go to AvaTax tab and add the following details:
    1. User Defined 1 and User Defined 2: Capable of passing on data that doesn't concern tax information.
    2. AvaTax Tax Code: Contains product taxability information captured by AvaTax.
  4. Click Save.

Map expenses to tax codes in NetSuite

In NetSuite, Expense Categories are available in Purchase Transactions and need to be mapped separately. To map codes to Expense Categories, follow these steps: 

  1. In NetSuite, go to Setup > Accounting > Expense Categories.
  2. Select the appropriate expense category from the list and click Edit
  3. On the expense category page, go to AvaTax tab and type the AvaTax Tax Code.
  4. Click Save.

Map items to UPCs

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. 

Define an item in NetSuite

In an item definition, the Item Name / Number is a required field and the default value in the item details. The Item Name / Number is sent to AvaTax if the UPC isn't available. For the Item Code, use tax rules and codes. For a valid UPC, the tax rule and code is sent by the UPC service. If the UPC is invalid, the UPC service sends the default tax code P0000000.

The item code or UPC is added when an item is defined. To define an item, follow these steps:

  1. In NetSuite, go to Lists > Accounting > Items.
  2. On the Items page, select the item and click Edit.
  3. On the Edit Item page, add the UPC for this product.
  4. Click Save.

Enable UPC service in NetSuite

To enable the UPC service in NetSuite, follow these steps:

  1. In NetSuite, go to Avalara > Setup > Configure Avalara.
  2. On the Avalara Settings page, go to the Tax Calculation tab and select Enable UPC Code as Item Code. Click Save.
  3. In AvaTax, the Transaction Detail page displays the item code and the tax code for an item. NetSuite sends the item code with UPC: in front of the code.

    NS_UPC3.png

Next steps

You're almost finished setting up your integration. All you need to do now is send a test transaction from NetSuite to AvaTax to make sure you're accurately calculating sales tax.