Calculating Tax for an Invoice Using Avalara AvaTax

If tax calculation using Avalara AvaTax is enabled in your org, you can calculate tax for an invoice.

Note:

If you calculated tax for the sales order that the invoice was created from, the tax fields are not copied from the sales order line items.

Tax is calculated for each invoice line. You can optionally provide a specific Avalara tax code for every line to calculate tax with greater precision, depending on the product being shipped. You can do this manually, or rely on the mappings created by your administrator. If an Avalara tax code is not provided for a line, Avalara AvaTax uses the origin and destination addresses to calculate tax. For more information, see AvaTax Code to Product Group Mappings.

The origin address is determined from the warehouse of the related sales order or service contract as follows:

  • If the related warehouse contains an address, the address of the warehouse is used.
  • If the related warehouse does not contain an address, the address of the ICP related to the warehouse is used.
  • If a warehouse is not specified, the org address is used.

The ship-to fields of the invoice are used as the destination address.

For a full description of the values sent from an invoice to Avalara, see Invoicing to Avalara Mappings.

You can calculate tax for an invoice in two ways:

  • Manually, by clicking Calculate Tax on the invoice record page. For more information, see Calculating Tax for a Single Invoice.
  • Automatically, when you confirm the shipment related to the invoice. For more information, contact your administrator.

After tax is calculated, the relevant tax rate, value, and name fields are automatically populated on each line. This enables you to view a breakdown by jurisdiction, for up to three jurisdictions. The Tax and Tax Rate fields contain the total values for the line.

In addition, a new line of type "Tax" is created. The Extended Price field of this line contains the total tax for all the invoice lines. Each time you recalculate tax for an invoice, the tax line is replaced by a new one.

The Total Tax field on the invoice also enables you to easily view the total amount of tax for all lines. The External Tax Status is set to "Calculated". The External Tax Transaction ID and External Tax Status Last Updated fields are also updated.

Calculating Tax for a Single Invoice

You can only calculate tax for an invoice once the related shipment is confirmed and its status is set to "Shipment Complete".

Warning:

This action deletes any existing lines of type "Tax" and creates a new tax line. This cannot be undone.

To calculate tax for a single invoice using Avalara AvaTax:

  1. Open the invoice that you want to calculate tax for.
  2. Click Calculate Tax.
  3. Click Calculate Tax to confirm the action.