Calculating Tax for a Purchase Order Using Avalara AvaTax

If tax calculation using Avalara AvaTax is enabled in your org, you can calculate tax for a purchase order.

Tax is calculated for each purchase order line item. 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.

When calculating tax, the origin address is set to the mailing address of the supplier site of the purchase order. The destination address is determined as follows:

  • If the Drop Ship field is selected for the purchase order, the drop ship address of the purchase order is used.
  • If the Override Ship to Address is populated on the purchase order, the customer address record is used.
  • If the Procured for field is populated on the purchase order, the shipping address of the customer account is used.
  • If the Ship to Warehouse field is populated on the purchase order, the address of the warehouse is used.

Calculating Tax for a Single Purchase Order

To calculate tax for a single purchase order using Avalara AvaTax:

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

After tax is calculated, the relevant tax rate, value, and name fields are automatically populated on each line item. 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 item. The Total Tax field on the purchase order enables you to view the total amount of tax for all lines.

The External Tax Status field is set to "Calculated". If you make changes to the purchase order that might impact its tax value, the External Tax Status automatically changes from "Calculated" to "Not Calculated". Some changes can indirectly impact a purchase order's tax value but do not cause the External Tax Status to change to "Not Calculated", such as editing the shipping address of the related customer account.