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Why is my AvaTax tax code calculating tax when it is supposed to be exempt in a state?

Overview

You have a tax code that is calculating tax when it should be nontaxable in certain states.

Environment

Avalara AvaTax

Resolution

  • Check your custom codes in the admin console.
    • If you create a new tax code using an AvaTax tax code, any system rules for that code will be overwritten.
    • That tax code will become 100% taxable unless custom tax rules are applied to it.
  • If you would like the system tax rules to dictate the taxability of this tax code, you will want to delete it from the custom tax code list.