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Avalara Help Center

How do I drop-ship with Avalara?


You want to know how to handle transactions where you are selling something you send to one location where you typically collect tax, but is delivered to the end purchaser in a different location, essentially how to configure your settings for drop shippingHoverTT.png into states where you have nexus but the product is shipped to the end user by a third party.


Avalara AvaTax


  • Once you have determined the point in the sale (address) where your company is required to collect, ensure Avalara receives that address to calculate the tax.
    • Please determine where in the sale you are required to collect, to ensure the transactions use the correct information for tax calculation, collecting tax at the drop-ship location within your nexus may be correct.
  • Send the address where you are required to collect as the address in your sale, this may require line level addresses if you need to have a different address on your invoice than where tax is collected
    • To send multiple addresses in one sale, for example, if you are billing the end user, but the shipping address is different because you are drop shipping, use line specific (line-level) addresses and make the following adjustment in your accounting system:
      • On the Document-level address, enter the shipping or billing location, as required based on your business need (this would typically be the address shown on your invoice)
      • On the Line-level address, enter the address where tax is required (this is the address where your company is obligated to collect tax, we recommend getting advice for your business)
      • If your accounting system doesn't support line-level addresses, import your transactions into the Admin Console.


Note: We recommend obtaining advice from a tax professional like a CPA, Tax Attorney, or the State's Department of Revenue to determine at which stage your business is required to collect tax. This article has information on how to send the correct information once you have determined the location/point in the transaction shipment where you are required to collect tax, but is not intended to advise you on which address to use. You may be required to collect tax at the destination point of your shipment with the third party, or at the destination of the end user. For example, ownership of the product could change at the point when the drop shipper takes possession, rather than at the end user's location. This is based on your business, type of product sold, contractual obligations, and the rules of the particular jurisdictions, etc., so we recommend getting professional advice for your business.


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