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Create a custom rule to exclude online marketplace transactions

This article applies to:AvaTax

To get AvaTax to ignore tax calculations for online marketplaces, like Amazon, Etsy, and Ebay, that collect and pay taxes for you, you need to set up an advanced tax rule. Advanced tax rules let you automate the transactions as they come in so you don't have to adjust those transactions manually.

Tax is still calculated on these transactions, but the amount won't appear on your liability reports or your returns.

Before you begin

Add a location for each marketplace to your company profile if your business application doesn't send that information to AvaTax.

Check the specific marketplace facilitator laws in regions where you're registered to collect and remit tax. In some states, such as Illinois, marketplaces only collect and pay taxes on behalf of remote sellers. If you have a physical location in one of those states, then your sales to customers in that state aren't covered by the marketplace facilitator laws, and you collect and pay taxes as normal.

Steps

  1. In AvaTax, go to Settings > All AvaTax Settings.
  2. Next to Custom Rules, select Manage.
  3. Select the Advanced Rules tab and then select Add an Advanced Rule.
  4. Enter the information for the rule.
    1. Give the rule a name that helps you remember why you made it.
    2. Select Marketplace for the rule type.
    3. Select the date you want the rule to take effect.
    4. Under When, enter your Field and Value selections.
      1. Under Field, for the first criteria, select ShiptoState.
      2. Under Value, enter the states where the marketplace collects and pays taxes for you.
      3. Select Add Criteria.
      4. For the second criteria, select ItemCode.
      5. Under Value, enter the code or codes that identify a marketplace transaction.
    5. Under Then, select the name of the marketplace location you created from the dropdown.

      Example
      An example of advanced rule settings showing the Field section set to ShipToState, the Value section set to U.S. states, and the Then section set to a marketplace location.
  5. Select Save Advanced Transaction Rule.
    Tip icon

    If you're making rules for more than one online marketplace, click on Add Rule Set and repeat steps 4-5 for your other marketplaces before saving.

AvaTax is set up to exclude transactions where the online marketplace collects and pays tax for you. We recommend testing your settings before using them on live transactions.

See also

Test your setup

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