Tax Calculation Using Avalara AvaTax

You can use Avalara AvaTax to calculate tax for Order and Inventory Management records. If you ship to or receive shipments from the United States or Canada this can be especially useful because Avalara provides updated Sales and Use Tax rates. For more information about Avalara AvaTax, see the Avalara Help.

Note:

Prior to Order and Inventory Management Winter 2023, the integration between Order and Inventory Management and Order and Inventory Management Direct for Avalara was only available in the Order and Inventory Management Direct for Avalara extension package. If you use the extension package, the information on this page or the related pages might not apply to you. We recommend that you migrate to the newer integrations. For more information, see Migrating from the Order and Inventory Management Direct for Avalara to Core.

Sales Tax and Seller Use Tax

As part of the order fulfillment process, you can calculate tax for the following records:

  • Customer quotations
  • Sales orders
  • Invoices
  • Credit invoices

Tax can also be automatically calculated when you perform everyday actions, for example, when you:

  • Print a customer quotation.
  • Approve a sales order.
  • Complete a shipment for an invoice.

Consumer Use Tax

If you need to remit consumer use tax, you can calculate tax as part of the acquisition process for the following records:

  • Purchase orders
  • AP vouchers
  • AP voucher credits

Tax can also be automatically calculated when you match an AP voucher.

Address Validation

Avalara AvaTax uses the origin and destination addresses to determine the jurisdictions for tax calculation. However, you must make sure that the addresses stored in your org are in the format recognized by the US Postal Service. This ensures that Avalara can process the addresses. You can validate the following addresses:

  • Address records
  • Customer address records
  • The address of a prospect on a customer quotation
  • The billing and shipping addresses of an account
  • The drop ship address of a purchase order
  • The drop ship address of a sales order
  • The mailing address of a supplier site
Note:

Validating the billing and shipping addresses of an account are Foundations processes. For more information, see Validating Addresses for Sales and Use Tax Calculation.

Avalara Tax Codes

Avalara AvaTax can calculate tax with greater precision based on the product being shipped and the method of delivery. You can specify the product and delivery method by providing an Avalara tax code for each document line. Your administrator can set up mappings between Order and Inventory Management products groups and Avalara tax code to automatically populate the tax codes. Alternatively, you can manually enter the code in the Override Avalara Tax Code field on the different line-level records.

Tax Returns Using Avalara

If you file your tax returns using Avalara, you can also post and commit the calculated tax to Avalara. You can do this for the following records:

  • Invoices
  • Credit invoices
  • AP vouchers
  • AP voucher credits

Setting up the Integration

To use these features, your administrator must set up the integration. For more information, see Setting up External Tax Calculation using Avalara AvaTax.