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Guidelines for mapping items to tax codes

This article applies to:Avalara AvaTax Update

Tax codes are the laws and rules that determine how items are taxed depending on the jurisdiction. Items that aren't mapped to tax codes are taxed as if they are tangible personal property—at the standard rate for each jurisdiction.  

When to map items

  • Some products require special tax treatment. If you sell items such as clothing, food, software, medical supplies, software subscriptions, and freight, map them to Avalara tax codes to get the best sales tax rate for your customers.
  • You can create a custom tax code if you sell an item with special taxability, but can't find a matching Avalara tax code.

Where to map items

The best place to map your items to tax codes depends on your business. 

  • The most common place to map an item to a tax code is the place where you maintain your master inventory list, which is typically in your business application. 
  • We recommend mapping items to tax codes in either your accounting software or AvaTax Update, but not both. Mapping items in AvaTax Update overrides mapping them in your business application.

 Get specific help to learn how to map items to Avalara tax codes in your business application.

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