> For the complete documentation index, see [llms.txt](https://docs.chord.co/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.chord.co/chord-oms/chord-oms-overview/taxes/tax-automation-with-avalara.md). # Tax Automation with Avalara ### Introduction [Avalara](https://www.avalara.com/us/en/index.html) is tax automation for businesses with real-time tax calculation and automatic returns filing. Suppose you want to sell something in Augusta, Georgia. Do you have a local sales tax or not? Classifying a sale in Avalara and inputting the proper address of where you're selling your item automatically states the correct tax rate. **Prerequisites** Make sure that you have created your account in Avalara. In the OMS, navigate to Settings --> Store. In the Environment Variables, scroll down and the following: | **Variables** | **Values** | \*\* Notes\*\* | | --------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | AVATAX\_ACCOUNT | **\** | Located under [Settings](https://help.avalara.com/Avalara_AvaTax_Update/Locate_account_number#:~:text=From%20the%20Avalara%20Homepage%2C%20select,The%20account%20ID%20appears.) in your Avalara Account | | AVATAX\_COMPANY\_CODE | DEFAULT | | | AVATAX\_LICENSE\_KEY | **\** | Your [license key](https://help.avalara.com/Avalara_AvaTax_Update/License_keys?origin=deflection) is emailed to you by Avalara when you set up your account. | | AVATAX\_LOG\_ENABLED | true | | | AVATAX\_ORIGIN | { "line1": "123 Lafayette Street", "line2": "city": "New York," "region": "NY," "postalCode": "10013", "country": "US" } | Make sure that your HQ address is formatted as follows - 123 Lafayette being an example here | | AVATAX\_TAX\_CALCULATION\_ENABLED | true | | | AVATAX | enabled | | Navigate to Taxes

Click on Tax Categories tab and click **New Tax Category** {% hint style="info" %} Tax categories are used to group tax rates together—all products and shipping methods are assigned a tax category {% endhint %}

{% hint style="info" %} Please refer to this[ list of Tax Codes](https://taxcode.avatax.avalara.com/) from Avalara to ensure that your codes are accurate. {% endhint %} Provide a **Name** and the **Tax Code** **Default** checkbox: when checked this tax category will be selected by default when creating new products or variants If you're primarily selling one category of good/service, select the checkbox. {% hint style="info" %} The rules for collecting sales tax on shipping charges can be complex for each state; therefore, [Avalara's whitepaper](https://www.avalara.com/us/en/learn/whitepapers/small-business-guide-shipping-charges-sales-tax.html) offers guidance on what to watch out for when it comes to sales tax and shipping. {% endhint %} Click on Tax Rate tab and click on New Tax Rate {% hint style="info" %} Tax rates associate a tax category with a geographic zone and a rate calculator (and also determine whether the tax is included in the item's original amount or not). {% endhint %} Below is an example of filling out the Tax Rate: {% hint style="danger" %} Make sure to enter $0.00 in the Rate field as Avalara will automatically calculate it. {% endhint %}

Avalara Settings tab reflect the values entered in the Environment Variables done above Click on Avalara Entity Use Codes if you are planning to exempt some customers from paying taxes. The `code` field is the value you will use, and the field `name` is the description you will show to the customer. You can either show “code - name”, like "A - FEDERAL GOV", or you can just show the name field. {% hint style="info" %} [Entity Use Codes](https://help.avalara.com/Avalara_AvaTax_Update/Exemption_Reason_Matrix_for_US_and_Canada) are one method for keeping track of tax-exempt customer transactions. When entering transactions with an entity use code, AvaTax will exempt the transaction as long as the code is valid for the customer and region where the transaction takes place. {% endhint %} Once everything has been setup, we recommend you created a manual order and click on **Test** **Connection** in Avalara Settings tab

You can select the tax-exempt code for your customers in the Users table

You have just finished setting up your Avalara tax! --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://docs.chord.co/chord-oms/chord-oms-overview/taxes/tax-automation-with-avalara.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.