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Avalara Help Center

Why is my transaction calculating tax?


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


Avalara AvaTax


  • Tax is calculated based on the address of the sale, the items being sold, and whether or not the customer or the item is exempt on the date of the transaction.
  • 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 is no Sales Tax Holiday in effect for items of this Tax Code
    • 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 Code from the Admin Console, it must be unlinked from items and/or tax rules (if applicable) before the tax code can be deleted
      • If you have the item mapped to a tax code in your admin console- make sure that the name of the item in the transaction matches the name of the item that you have mapped. 
    • 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.
      • If an Entity Use Code is being used- the code may not be exempt in all applicable jurisdictions. 
  • 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.