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Avalara Help Center

How Does Avalara AvaTax Handle Freight Taxes?

Overview

You would like to know how AvaTax processes freight taxes.

Environment

AvaTax

Resolution

  • Regulations on freight and handling vary on a state-by-state basis
    • Freight can also be taxed differently based on whether it is freight related to shipping on a company truck versus a common carrier like UPS or FED EX.  
  • AvaTax has built-in functionality to handle standard freight (FOB Destination) on a common carrier. The AvaTax service is designed to look for one of two tax codes.
    • FR: The default freight code in most AvaTax connectors and is passed as a tax code with amounts entered into the freight field. If FR is sent to AvaTax, the standard Freight On-Board (FOB) destination rules for a particular state are applied.
    • FR020100: This code is essentially the same as FR, but it is the actual tax code that is programmed into the AvaTax System. It represents standard Freight On-Board (FOB) destination.
  • We offer a larger selection of tax codes that allow for more flexibility. These tax codes account for differences from state to state dealing with specific types of shipping.

Next steps

For more information, see manage product taxability.