Some products—such as clothing, food, software, medical supplies, software subscriptions, and freight—are taxed differently depending on where they're sold. To get the most accurate rate for these items, map them to Avalara tax codes. If you don't map items to Avalara tax codes, all products and services are taxed at the standard rate for each jurisdiction.
Before you begin
Review the guidelines for mapping items to Avalara tax codes if you aren't sure whether to map items in Microsoft Dynamics 365 for Finance and Operations or AvaTax.
- In Microsoft Dynamics 365 for Finance and Operations, go to Avalara AvaTax > Setup > Utilities > Tax Code Mapping.
The Taxability Code Mapping page displays.
- Select the document type you want to assign a tax code to:
- Fee - Available in the project module only
- Hour - Available in the project module only
- Expense - Available in the project module only
- Project item - Available in the project module only
- Ledger account - The main account segment of your general ledger. Can be used for free text invoices and on-account project invoices.
- Item group
- Procurement category
- Sales category
- Item sales tax group
- Select the applicable Item/Category/Account.
- Enter the Taxability Code and then select Close.
This code can be an Avalara tax code or a custom tax code.