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Avalara Help Center

Why is my transaction calculating tax?

Overview

You have a transaction that is calculating tax when it should not.

Environment

Avalara AvaTax

Resolution

  • Tax is calculated based on the address of the sale, the items being sold, and whether or not the customer is exempt.
  • Check the transaction in the Admin Console to see what is being sent to AvaTax:
    • Make sure the address is in correct destination state
    • Make sure there are no custom tax rules for the destination state
    • Make sure the item is using the correct tax code
    • Check the tax codes to see if they are actually taxable in the state
      • If you send a Tax Code on your transaction or you have mapped your items to AvaTax Tax Codes, make sure the Tax Code you specify is a valid AvaTax code
        • All tax codes will be between 2 and 8 characters long, NT or P0000000 for example, and will begin with a letter
      • Check Custom Tax Codes, make sure any Custom Tax Codes have Custom Tax Rules to tell AvaTax the code is non-taxable in each jurisdiction
      • There should not be a Custom Tax Code of the same name of an existing AvaTax Tax Code  
        • Doing so will override the Avalara system taxability of the code
        • Delete the custom tax code of the same name or change the label of the custom tax code
          • Note: If deleting a Custom Tax Codefrom the Admin Console, it must be unlinked from items and/or tax rules (if applicable) before the tax code can be deleted
    • Check the transaction to see if the customer has a system exemption applying (gold certificate icon on the line) or an exemption certificate number or Entity Use Code (click Edit to view this detail)
    • If using an exemption certificate, make sure an exemption certificate matches the ship-to state of the invoice. 
      • The exemption certificate maybe expired/revoked 
      • The CustomerCode doesn't match the Customer number of the exemption
      • Make sure you are not sending an Entity Use Code of 'Taxable' on your transactions. This will override any exemptions you have on file.
  • In your configuration with your accounting software- make sure that you are using the correct configuration credentials
    • Account number
    • License Key
    • Company Code
    • Service URL.