How to Configure Customers to be taxed by AvaTax

Create an "AvaTax" Tax item in QuickBooks, set that item in Configuration Manager, then set it as the customer's Tax Category. Exemption codes can be managed with customer types.

Once you have completed the initial setup of the Avalara integration with Acctivate, you will need to configure your customers in which Sales Orders should be taxed via AvaTax.

Create and implement ‘AvaTax’ Tax Code 

  1. In QuickBooks, go to Lists > Item List > Item > New Item and create a new Sales Tax Item called Avatax. The tax rate should be 0.0% with the vendor set to Avalara, since the service will be handling tax calculations and payments. The new item should look similar to the following example:
Avatax Sales Tax

2. Another Sales Tax Item should be setup the same as above, however it should have the Sales Tax Name of Avatax Line. For example:

Avatax Line Item

3. Complete a synchronization with QuickBooks, which will push the new sales tax items to Acctivate.

4. In Acctivate, assign the newly created sales tax items to be used when Sales Orders should be calculated via Avalara.  To accomplish this, browse to File > Configuration Manager.  Drill down to Services > Avalara.  Here, you can set the Tax Item to the ‘Avatax Line’ Tax Item.

Avalara Tax Item

5. In Acctivate, set the Tax Category on your Customer – Ship Tos to the  ‘Avatax’ tax category.

Tax Category Avatax


Use Customer Types to map Avalara Usage Codes

  1. Avalara utilizes Customer Usage codes (A.K.A Entity Use codes) for sales tax exemption based on the customer type.  You can enter in these customer exemption codes in the Customer Type setup in Configuration Manager.  To accomplish this, browse to File > Configuration Manager.  Drill down to Customer, then Customer Type.
  2. Here, you can enter in the Tax Exemption Code based on the Customer Type.  You may need to create a Customer Type based on the Customer Usage code you will be required to use. Screen shot in step 3 shows where to assign the related Customer Type. For a list of Tax Exemption Codes to assign to your customer types, please refer to this article from AvaTax.
Tax Exemption Customer Type

3. In order for the Customer Exemption Code to be utilized you will also need to set the Customer’s Tax Exemption Code on the Customer record.  You can find this field on the Customer window by opening the related customer and selecting the ‘Tax Info’ sub-tab of the Customer Tab.

Customer Tax Exemption and Type

Once these steps have been completed, any newly created Sales Orders for any customer in which you have set the customer ship to Tax Category to ‘AvaTax’ should be reviewed and sales tax to be calculated by Avalara.

Warehouse Address Information

Avalara requires each warehouse in Acctivate to have a complete address. If you receive an error when saving an order related to an invalid or incomplete address, review the Warehouse settings in Configuration Manager and make sure that the address fields contain complete and valid information. According to Avalara, a taxable address must include a (line, city, and region (state)) or a (line and zip) or a (region (state) and postal code).

Warehouse Address

Once setup and tested in Acctivate, make sure to disable Avalara in QuickBooks. If it’s setup in both programs, the service will be called in Acctivate and again in QuickBooks.

For more information about errors returned by Avalara, see our Common Avalara Errors article.