Some products and services are taxed differently in different jurisdictions. Apply Avalara tax codes to products and services you sell to help account for this varying taxability. There are a few different ways you can apply, or map, Avalara tax codes to your products and services:
- Map items to predefined Avalara tax codes; associate a code with each item you sell so AvaTax knows which tax rate to apply
- Map items to universal product codes (UPCs)
Items that aren't mapped to Avalara tax codes are treated as tangible personal property (TPP) and are fully taxed during calculation.
Map an item to a tax code
The process is simple. Map items to Avalara tax codes, and when your accounting software processes transactions or when you upload the transactions to AvaTax, AvaTax determines the taxability for the items you sell based on the rules behind these Avalara tax codes. For more information about Avalara tax codes, see Select Avalara Tax Codes.
Avalara recommends you map items to Avalara tax codes in your accounting software. To learn how to configure your accounting software to map Avalara tax codes in your accounting software, check your accounting software configuration documentation. See our handy chart for a little guidance deciding whether you should map items to Avalara tax codes in your accounting software or directly in AvaTax.
Keep in mind that Avalara updates Avalara tax codes when taxability rules and laws change, but you have to maintain your own custom tax codes and rules; these aren't automatically updated when changes occur. To be sure you're using the most current rules to tax your products and services, use Avalara tax codes. If you map your items to universal product codes (UPCs), you don't need to use Avalara tax codes because UPCs already have taxability rules associated with them.
If you map in your accounting software and in AvaTax, the mapping in AvaTax overrides any mapping in your accounting software.
Map Avalara tax codes to items and product classes in AvaTax for Microsoft Dynamics GP
Before you map items to Avalara tax codes, make sure you:
- Enable item class mapping when you install and configure AvaTax for Microsoft Dynamics GP
- Select Taxability from the Item Class Mapping and Tax Code Mapping drop-down menus
If both an individual item and the class it belongs to are mapped to an Avalara tax code, AvaTax for Microsoft Dynamics GP uses the tax code mapped to the item. This lets you set up mixed taxability in an item class.
Map a tax code to an item in AvaTax for Microsoft Dynamics GP
To map a tax code to an item:
- Select an item from your inventory in Microsoft Dynamics GP. The Item Maintenance Options dialog box opens.
- Under Category, in Taxability, type either the Avalara tax code or a custom tax code for the item, and then click Ok.
Map a tax code to a product class in AvaTax for Microsoft Dynamics GP
Product class item mapping refers to the ability to link a single tax code to a collection of item numbers or SKU’s within an ERP system. The benefit of being able to use product class item mapping is that you can assign one code to tens, hundreds, or thousands of SKU’s in a single instance, which is ideal for companies that have an extensive product catalog. Another benefit is that you can readily monitor and keep track of your item master list within your accounting software without having to maintain an item mapping matrix outside of your item master list.
To map a tax code to a product class:
- To find the Avalara tax code, use our Tax Code Search.
- In Microsoft Dynamics GP, go to Cards > Inventory > Item.
- Click Class ID, and then click Option.
- Under Category, in Taxability, type the tax code for the product class.
Map an item to a UPC
Instead of using Avalara tax codes, send the model number or the UPC from your accounting software to AvaTax. If the UPC isn't available, the model number is set as the default and sent to AvaTax. To customize taxability for specific products, items need to be mapped to UPCs and model numbers.
To map a UPC to an item:
- In Microsoft Dynamics GP, go to Microsoft Dynamics GP > Tools > Utilities > Avalara AvaTax > Update, and then click AvaTax Item UPC Mapping.
- In the AvaTax UPC Code Mapping window, use Item Number From and Item Number To to select the range of items, and then click Redisplay to show the items you selected.
- Select an item, and then add the item UPC.