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Set up AvaTax to calculate simplified rates for remote sellers, direct marketers, or marketplaces

This article applies to:

Some states offer a single sellers use tax rate for remote sellers, direct marketers, or marketplaces that facilitate remote sales. States may refer to this as a "simplified" or "flat" tax rate. Alabama, Louisiana, and Texas currently offer simplified rates to certain sellers. If you're an eligible seller and you're registered with the state, update your tax type setting in AvaTax to apply the simplified tax rate to your transactions.
 

Before you begin

  • Your tax type in AvaTax should match your tax registration with the state Department of Revenue
  • If you're a marketplace, add your marketplace to your AvaTax company profile before completing these steps
  • Prior to October 2021, simplified tax rates were applied through a custom tax rule
  • Determine if your business is eligible to collect the simplified rate in any of the following states:
    • Alabama: You must be registered to collect Simplified Sellers Use Tax (SSUT)
    • Louisiana: You must be registered as a direct marketer, filing the Direct Marketer Sales Tax Return (Form 1031)
    • Texas: You must have notified the Texas Comptroller's office in writing of your intent to collect the single local use tax rate

Steps

  1. In AvaTax, go to Settings > Where You Collect.
  2. Find the state that offers a flat rate and select Details. 
  3. Select Use this state's simplified sellers use rate. This setting will apply the simplified rate to all transactions in this state.
    • You are responsible for registering with the state Department of Revenue
    • The Tax Type selector is hidden when this option is checked
  4. Recalculate transactions if they qualify for the simplified rate but were calculated before you updated this setting.
     

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    Note

    Recalculating might change the amount of tax that was originally calculated on the transaction.

  5. Add the appropriate forms to your scheduled returns if you're using Managed Returns.

Once this setting has been enabled, eligible transactions are calculated at the appropriate rate for the jurisdiction.
 

How AvaTax displays this tax rate in a transaction

Find your transaction in AvaTax and expand a line item to view the special tax rate that was applied.

Depending on the destination and jurisdictions involved, other jurisdiction tax rates may be listed in your transaction details with a value of 0.

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Related

Add a marketplace location
Recalculate transactions
Schedule returns
Set up Alabama returns
Set up Louisiana returns
Set up Texas returns

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