Avatax

Avatax

Tax compliance software and automated solutions

Even though our tax management system works great, setting up taxes for countries that use an extremely complicated tax system requires a huge amount of work. Countries like Canada and the United States maintain extremely complicated tax systems. For this reason, retailers that operate in these countries often choose to use Avalara AvaTax.

EVA settings

AvaTax is a service that provides an enormous list of specific tax codes. To use AvaTax, we first need to set a few settings in EVA.

Setting	Description
AvaTax:CompanyCode	The Avalara Company Code, found in your Avalara account.
AvaTax:InvoiceAction	None = the taxes for the order are calculated, but the order is not exported to Avalara. Save = the order is exported to Avalara, but still needs a (manual) commit in Avalara. SaveAndCommit = the order is instantly exported to and committed in Avalara.
AvaTax:Password	Password to your AvaTax account.
AvaTax:Production	TRUE = production FALSE = sandbox
AvaTax:ShippingCostsTaxCode	Can be used to overwrite the default Avatax taxcode 'FR' assigned to the shipping costs.
AvaTax:Username	Username to your AvaTax account.
OrderTaxCalculator	Set to AVATAX for tax calculation through AvaTax.

Configuration

In addition to these settings, AvaTax requires a certain setup of your tax codes and tax rates.

From the AvaTax tax codes list, let's say we want to configure the following tax code:

PC040501 - Clothing and related products (business-to-customer) - children's clothing (below age 11). For more on how Avalara tax codes are made up, check Anatomy of an Avalara tax code.

To do so, we first need to set a new tax code. For the sake of clarity, we fill out the tax code description in the Title field. Description and Ledger Class are both optional. The Backend ID is completely customizable to your liking, it is used when creating products using the ImportProducts API service. For Backend Tax code ID, set the correct AvaTax PC-code.

Now that we have created our custom tax code based on the AvaTax tax code, we do still need to configure our tax rates for the tax code. However, the tax rates need to be set to 0% since AvaTax will provide us with the correct rate. In addition, the Tax category has to be set to Dynamic.

Settings on the organization unit

In order for AvaTax to work, the organization units that ship your products need a complete address.

Settings in Avalara

• Add all of your stores and warehouses under Settings → Company Locations.
• Select all states for which you collect taxes in Settings → Where you collect Tax.
• Fill out Taxpayer ID (EIN) in Settings → Company Details.
• Fill out Company Code in Settings → Company Locations.

Company code requirement on Avalara

Company Code is required/necessaqry if:

• The AvaTax:InvoiceAction setting is set to SaveAndCommit.
• If Avatax is used to file tax reports for example. In general, using the company code will result in exporting invoices to Avatax for a specific company only.