Tax Automation (AvaTax)

When a Customer Shouldn't Pay Tax

Resellers, non-profits, and government buyers are often legally exempt from sales tax — but only when a valid, on-file exemption certificate backs it up.

Recording an Exemption

1. On the customer record, add an Exemption Code (e.g. resale, non-profit) for the relevant State/Jurisdiction — exemptions are jurisdiction-specific, not blanket for the whole customer everywhere.
2. Set whether it applies to All Jurisdictions or just the one specified.
3. Keep the actual signed certificate document attached/filed (Documents app) — an exemption code without the backing paperwork won't hold up if your business is ever audited.

Exemption States

An exemption rule has its own status/lifecycle — keep expired or superseded exemption certificates from silently continuing to apply; review customer exemptions periodically, since many certificates (especially resale certificates) require periodic renewal in various US states.

Best Practices

• Always test configuration changes in Sandbox before touching Production.
• Keep product tax codes reviewed whenever you add a new product category — an unmapped product defaults to general taxable, which may be wrong for special categories.
• Reconcile Quickenerp's tax report (Financial Reports course) against Avalara's own reporting periodically — they should agree since Avalara is the source of truth for the actual calculation.

Where AvaTax Kicks In

Once connected, AvaTax calculates tax automatically wherever a taxable document is created:

• Sales Orders & Invoices – tax recalculates based on the customer's actual shipping/billing address as line items change.
• Website Checkout – if the eCommerce integration is active, tax is calculated live as the customer enters their address at checkout, showing the correct total before they pay rather than an estimate.

Address Validation

Since tax jurisdictions can be address-specific (down to which side of a street), use the Validate Address action on a customer to confirm/correct their address against Avalara's database before relying on the calculated tax — an unvalidated, slightly-off address is a common cause of a customer being taxed at the wrong jurisdiction's rate.

Committing Transactions

Posting an invoice commits that transaction to Avalara's records, which is what actually feeds your tax return there — a draft/uncommitted transaction is only a tax estimate. Voiding/cancelling a posted invoice should also reverse it in Avalara, keeping the two systems in sync automatically.

Connecting to Avalara

1. Go to Accounting > Configuration > AvaTax → Create.
2. Enter your Account ID and License Key from your Avalara account.
3. Set the Service URL to Sandbox while testing, then switch to Production when ready to go live — never test against Production, since Sandbox transactions don't count toward your real filing.
4. Set the Company Code matching how your company is registered in Avalara (use the "Get Company Code" action if unsure).

Testing the Connection

Use the Ping action to confirm Quickenerp can actually reach and authenticate against Avalara before relying on it for real transactions — a failed ping means check the Account ID/License Key or the Sandbox/Production URL mismatch first.

Product Tax Codes

Assign the correct Tax Code to each product or product category — this is what tells AvaTax whether an item is fully taxable, exempt, or subject to special category rules (e.g. many US states treat groceries or clothing differently from general merchandise). Getting this wrong is the most common source of incorrect calculated tax.