Tax Automation with Avalara
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 | <your Avalara Account number> | Located under Settings in your Avalara Account |
AVATAX_COMPANY_CODE | DEFAULT | |
AVATAX_LICENSE_KEY | <Your Avalara Licence key> | Your license key 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
Tax categories are used to group tax rates together—all products and shipping methods are assigned a tax category
Please refer to this list of Tax Codes from Avalara to ensure that your codes are accurate.
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.
The rules for collecting sales tax on shipping charges can be complex for each state; therefore, Avalara's whitepaper offers guidance on what to watch out for when it comes to sales tax and shipping.
Click on Tax Rate tab and click on New Tax Rate
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).
Below is an example of filling out the Tax Rate:
Make sure to enter $0.00 in the Rate field as Avalara will automatically calculate it.
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.
Entity Use Codes 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.
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!