Set up an Account or a Product as Tax Exempt with AvaTax

Overview 

Avalara provides through its different product offerings, end-to-end sales tax compliance solutions. Their AvaTax tax engine provides the capability to automatically calculate tax based off of the most current tax rules and legislation. AvaTax is integrated into Accounting Seed. In addition to the tax calculation, with the AvaTax integration into Accounting Seed, you can set up an Account and/or a Product to be tax exempt. 

Set up an Account as Tax Exempt

To set up an Account as tax exempt, the Exemption Number or Entity Use Code field should be included on the Account record. Edit the page layout for an Account record to add the fields. For more information, refer to the Edit a Page Layout Manually article. 

1. Navigate to Accounting Home and click the Setup tab. Then, under the  Master menu, click Accounts.
2. Select a list view (other than the Recently Viewed list view).
3. Display an Account record that you want to make tax exempt.
4. Enter the Exemption Number or the Entity Use Code.
   Note: These fields are mutually exclusive. Therefore, one or the other should be used.
   • Exemption Number - If this field is populated, the Account will be considered as tax exempt by AvaTax. AvaTax does not verify the accuracy of the number that is entered in this field. 
   • Entity Use Code - This field should only be populated with a valid Entity Use Code that is available in AvaTax. AvaTax verifies the accuracy of the code that is entered in this field. If the code is not valid, the Account will not be tax exempt.
     
     

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Set up a Product as Tax Exempt

1. Go to taxcode.avatax.avalara.com.
2. Enter ON030000 in the Lookup search textbox. The Non-Taxable Transaction code displays.
   Note: Enter the letters O and N, followed by the number zero, the number three, and four additional zeros.
   
   
   
   
3. In Accounting Seed, navigate to Accounting Home and click the Setup tab. Then, under the Master menu, click Products.
4. Select the product that you want to make tax exempt.
5. Click Edit.
6. Copy and paste the Non-Taxable Transaction code from Avalara into the Tax Code field.
   
   
   
   
7. Click Save. The product should now be set up as tax exempt.
   
   Notes: 
   
• When using AvaTax, any Product that does not map to a specific Tax Code is viewed as a taxable Product rather than a non-taxable Product. Non-taxable Products must be mapped to the correct Tax Code. AvaTax has a default Tax Code (P000000), which will be used to calculate taxes on Products that are not mapped to a specific Tax Code. Products with this default Tax Code will be taxed at the tangible personal property tax rate, which typically is the highest tax rate in a tax jurisdiction. 
• The Tax Code field is used in the AvaTax integration as part of the API callout to Avalara for calculating the correct Tax Amount. 
• When using AvaTax as your tax calculation method, the Tax Type and Tax Rate fields are not applicable.

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