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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 code 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 code 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.

Ensure that the Inventory Control module is active in Sage 300 to use the following utilities:

  • AvaTax Item Tax Code Mapping (for Type I/C Item and Category)
  • AvaTax Freight/Misc. Tax Code
  • AvaTax OE Misc. Charge Mapping

Map tax codes to items

  • 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.
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  1. Click Sage Sales Tax Powered by AvaTax > AvaTax Setup.
  2. Click AvaTax Item Tax Code Mapping
  3. Next to Type, select I/C ItemA/R Item, or Category.
  4. Next to Item Number, use the back and forth arrows to select the item number or category code.
  5. Next to AvaTax Tax Code, type the tax code for the item. You can find that list in the Avalara System Tax Codes Toolkit or in the Tax Code Search Tool. Then click Add.

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Select freight and miscellaneous tax codes

To view system freight codes and to add custom codes to use for freight or miscellaneous charges in Sage 300, follow these steps:

  1. Click Sage Sales Tax Powered by AvaTax > AvaTax Setup.
  2. Click AvaTax Freight/Misc. Tax Code.
  3. Next to Tax Code, select a tax code. The Description field shows a description of that tax code.
  4. Click the blue arrow next to AvaTax Freight Code Mapping, and in the OE Misc. Charge Mapping dialog box, next to Miscellaneous Charge Code, select a charge code.
  5. Next to Tax Code, click the Search icon.
  6. In the Finder - AvaTax Shipping Code dialog box, under Freight/Misc. Tax Code, click a tax code, and then click Select.
  7. At the lower left, click Add, Save, and then Close.

Map freight and miscellaneous charges to tax codes

To map freight and other miscellaneous charges to tax codes, follow these steps:

  1. Click Sage Sales Tax Powered by AvaTax > AvaTax Setup.
  2. Click AvaTax OE Misc. Charge Mapping.
  3. Next to Miscellaneous Charge Code, use the back and forth arrows or use the Finder to to select a freight or miscellaneous code. The Description field auto populates with information based on your selection in the previous field.
  4. Next to Tax Code, select an AvaTax System tax code to map to the freight or a miscellaneous code that you selected above.
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Use product classes

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 product classes

When you map tax codes to product classes, you link a single tax code to groups of item numbers or SKUs. The benefit of doing this is that you can assign one code to tens, hundreds, or even thousands of item numbers or SKUs at once, which is ideal if your business has a large product catalog. Another benefit is that you can easily monitor and keep track of your item master list in your accounting or  ERP system without having to maintain another item mapping matrix. The Item Tax Code Mapping utility in Sage Sales Tax for Sage 300 Powered by AvaTax lets you look up and select tax codes and map them to product classes.

To map tax codes to items, follow these steps:

  1. On the left pane under Sage Sales Tax Powered by AvaTax, click AvaTax Setup.

  2. Click AvaTax Item Tax Code Mapping.
  3. In the AvaTax Item Tax Code Mapping window: 
    1. In the Type field, select one of the following options:
      • Category: To map a category of items. Select the Category Code.

      • Item: To map an individual item. Select the Item Number.

    2. Assign the AvaTax Tax Code. (Download the tax codes list here.)
    3. To add this tax code mapping, click Add.
    4. To change a tax code mapping, select the record and update the details. Click Save.
    5. To delete this tax code mapping, click Delete.