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Avalara Help Center

How to I obtain the most accurate rate in SalesTaxII?

Overview

I would like to know how to get the most accurate rate in SalesTaxII.

Environment

SalesTaxII 

Resolution

Using Zip Codes
In general, when looking at taxing requirements in all 50 states, zip codes have a high degree of
accuracy, usually in the middle to upper 90% range.


In 20 states, there is no local taxation (no tax at county or city level). No local taxation means that as long
as the zip code is correct, either 5 digit or zip+4, you will get the correct rate 100% of the time. (We
include Mississippi in these 20 states, even though there is a local tax in one city, Tupelo).We do not
provide zip+4 cross reference records for these states since they do not enhance accuracy.
Zip codes become less accurate when there is county or city tax to deal with. 30 states have these levels
of tax. We do provide zip+4 cross reference records for these states since they do enhance accuracy.


Problems with five digit zip code when used alone to locate a sales tax rate:
• A single five digit zip code can be used by more than one city, and/or more than one county.


Problems with zip+4 zip code when used alone to locate a sales tax rate:
• Zip+4 can point to the correct county. We hav found through analysis that in the 30 states where zip+4 can
point to a correct county, accuracy is better than 99.9%. However, zip+4 codes as provided by the post office

present problems when trying to pinpoint a city. Zip+4 codes point to the city where there is a post office.

Sometimes the zip+4 points to a PO box. This means that pinpointing cities with zip+4 is not 100% accurate.

 


Using City Names
• In general, city names can provide a very high degree of accuracy. This method pin-points the correct
city, however, if that city resides in more than one county, you can arrive at the wrong rate. Examples
are Houston and Dallas, Texas and Atlanta, Georgia.
• Another obvious problem can be spelling. SalesTaxII uses the US Postal Service City/State file spelling
of city and county names. If you wish to access rates by city name, you must clean the city names in
your customer and ship-to database files. Spelling and punctuation (there can be no hyphens or other
special characters in the city name) must match exactly the USPS spelling and punctuation.
• Greater accuracy can be achieved by using city name and zip code to locate sales tax rates:
• You can provide zip code, either five digit or zip+4, to assist the search process when using city name.
Zip code is used to help select the correct county. City name together with zip code can provide
accuracy in the plus 98% accuracy range.

 


Using Location Codes
• The most accurate way to access tax rates is by Location Code. Accuracy can approach 100% using
this access method. Location Code identifies all rate records to the lowest taxing element. This code is
used by Avalara for all maintenance. However, the length of this code, 12 characters, can be prohibitive
when a user wishes to populate their customer and ship-to databases with it. For this reason, we
developed and recommend that you use Signature Code.

 


Using Signature Codes
Signature Code can provide the same accuracy as Location Code. Accuracy can approach 100% when
using this method. This unique four character code (sometimes referred to as a geo-code) identifies each
taxing entity.
We use the term ‘approaching 100%’ because some customers reside in unincorporated areas of a city or
county.