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AvaTax settings for Microsoft Dynamics 365 Finance and Operations

AvaTax for Microsoft Dynamics 365 Finance and Operations works with the suggested default settings. But you can adjust them any time based on your company's business needs.

In Microsoft Dynamics 365 Finance and Operations, go to Modules > Avalara AvaTax > Setup > Set Up the AvaTax Connector and adjust the settings you want to change.

Account credentials

To change the credentials you entered while setting up AvaTax for Microsoft Dynamics 365 Finance and Operations, on the Account Credentials tab, click Edit Settings, make changes, and then click Verify Credentials. If you make changes, you must supply the AvaTax license key to verify your credentials.

Field Action
  • Account Number
  • License Key
View your account number in AvaTax. Select Settings > All AvaTax settings. The account number is listed at the top of the page as your Account ID. If you don't know your license key, get a new one.
Web service URL Select the type of account you're connecting to in AvaTax.
Company code Every business application that works with AvaTax uses a company code to identify itself to AvaTax. Select the company code that you created in AvaTax from the list.

General

Section Field and Description
General Options
  • Display all Warning messages: If set to No, you see only error messages.
  • Tax Mapping Code: Recommended. Set to Yes to enable mapping items to Avalara tax codes to account for varying taxability of products and services. When enabled, a button displays to open the page for doing that.
  • Optional: User Defined 1: Select the type of data you want to send to AvaTax. This data doesn't affect tax calculation.
  • Optional: User Defined 2: Select the type of data you want to send to AvaTax. This data doesn't affect tax calculation.
  • Enable Entity \ Use Code: Set to Yes to map entity/use codes for your customer addresses to flag them as exempt from sales tax. When enabled, a button displays to open the page for doing that. Learn about other ways to manage customer exemptions.
  • Optional: Send item account to AvaTax: Set to Yes to send general ledger account information for an item to AvaTax. This information doesn't affect tax calculation.
  • Use UPC as Item Code: Set to Yes to send a UPC instead of an item code to AvaTax. Talk to your Account Manager about subscribing to this feature.
  • Use Invoice Account for Tax Exemption: If set to Yes, when a customer is mapped to an invoice account with an exemption number, sales orders created for the company use the exemption number on the invoice account. 
Return Order Address

Return Order Address: Select the address you want to use for sales tax calculation of return orders and credit memos.

  • Bill To: Use the customer's primary address as the destination address for tax calculation.
  • Ship To: If the return order is created from a sales invoices, the delivery address on the sales invoice is used as the destination address for tax calculation. If the return order is not created from a sales invoice, the delivery address of the return order is used.
Shipping Options
  • Enable charge code mapping: Set to Yes to enable the mapping of charges codes to Avalara tax codes. Available charges codes can be assigned to tax codes associated with freight or miscellaneous charges references. When enabled, a button displays to open the page for doing that.
  • Import historic mapping: If you’re updating from a previous version of Microsoft Dynamics AX or Microsoft Dynamics 365, click to import the mapping you had in those.
Adapter Options
  • Request Timeout (In seconds): We recommend that you don't adjust this setting. Enter the length of time to wait for AvaTax to respond to calculation requests.
  • Enable logging: We recommend that you don't adjust this setting. Enables client-side logging that's used primarily for troubleshooting issues. If you choose to enable logging, all success, warning, and error messages are included in the log.
  • Extensive logging: We recommend that you don't adjust this setting. Enables server logging that allows Avalara to be more proactive troubleshooting your issues.

Tax Calculation

Section Field and Description
General Options
  • Disable Tax calculation: If you choose to set to Yes, tax calculation is disabled and your company's business application no longer uses AvaTax to calculate tax on transactions.
  • Always check address before calculating tax: Set to Yes to force an address validation of the sales/billing document prior to tax calculation. We don't recommend turning this on. It increases your usage significantly.
  • Enable credit note / return order tax override: Generally recommended to set to Yes if you want to override the tax details for a credit note / return order.
Tax Area Code
  • Tax Group Code Mass Update: Open a utility to perform a mass updates of the sales tax group code on a range of customers. To use AvaTax to calculate tax for existing customers, update their sales tax group:
    1. Click Tax Group Code Mass Update. The Tax Group pane opens.
    2. From Customer/Vendor, select Customer.
    3. From Sales tax group, select AVATAX.
    4. Click the Range field, and then click Select. The Inquiry page opens.
    5. On the Range tab, click the down arrow under Criteria, select the first customer in the range, and then type 2 periods (..).
    6. Click the down arrow again, select the last customer in the range, and then click OK.
    7. Close the Tax Group pane
  • Sales tax group: Select the default sales tax group. Select AVATAX to use AvaTax for tax calculation.

Address Validation

Section Field and Description
General Options
  • Disable Address Validation: If you disable address validation, AvaTax uses the customer's ship-to address as entered to calculate the correct sales tax. Sales tax might be calculated incorrectly if this option is disabled.
  • Return Results in Upper Case: Set to Yes to save all address validation results in uppercase format, which is the preferred format of the U.S. Postal Service.
Perform Address Validation based on country names selected Select the countries for which AvaTax validates addresses. Address validation is available for the US and Canada. Accurate tax calculation starts with accurate addresses.
Other Options Reset: Clears the Address Validated flag. Previously verified addresses are no longer recognized as validated.

Consumer Use Tax

Section Field and Description
Consumer Use Tax Enable use tax assessment on vendor invoice: If set to Yes, your accounting software uses AvaTax to calculate consumer use tax on vendor consumer use tax transactions. When enabled, a button displays to open the page for selecting vendors to assess.
Posting account
  • Use Tax liability account: Select the ledger account to use for posting consumer use tax liability.
  • GL Account to Debit: Select a relevant account to post consumer use tax expenses to.
    • Single Account: Select to enable the list of accounts to choose from. You must select Single Account if you don't use items on vendor invoices.
    • Inventory Account: Select to use the inventory account associated with each item.
  • Use Tax Debit GL Account: If GL Account to Debit is Single Account, select the relevant account.
  • Use tax journal name: Select the relevant name.
Taxability
  • Apply Avalara Goods & Service code mapped on item group when it's not available on an item: If this is set to Yes and there isn't a tax code mapped to an item, but there is a tax code mapped to the item group, AvaTax will use the item group code for calculations. Recommended.
  • Apply Avalara Goods & Service Code mapped on:
    • Item code: Applies the setting selected in Apply Avalara Goods & Service Code mapped on item group when it's not available on an item.
    • Procurement category: AvaTax uses the tax code from the procurement category.
Accrual
  • Auto accrue undercharged tax:
    • No - When you post a transaction, messages display showing the difference between the tax the vendor charged and the tax AvaTax calculated. If the vendor charged less than the amount AvaTax calculated, and the amount is not within the threshold amount indicated in your settings, you decide whether to accrue that amount.
    • Yes - When you post a transaction, the amount outside the threshold indicated in your settings automatically accrues and posts to your general ledger.
  • Threshold Amount: Enter the dollar amount AvaTax uses to determine whether under-charged tax on a vendor invoice is of an amount significant enough to trigger accrual or the accrual message when posting transactions.

Project

Section Field and Description
Project address Project invoice address: Select the appropriate project address for your invoice.
Tax calculate Calculate Tax on Advance: Set to Yes to calculate tax on advance payment transactions.