Feature Spotlight: Automated Tax Calculation with AvaTax

Following our previous integration of TaxCloud, we are pleased to announce another integration with AvaTax. AvaTax, a product of Avalara, provides automated sales tax solutions to streamline cumbersome, error-prone tax compliance processes and reduces the risk of loss or penalty in case of an audit. AvaTax automatically performs address validation, jurisdiction research and rate calculation and allows you to manage even the most complicated tax issues, such as situs, nexus, tax tiers, tax holidays, exemptions, certificate management and product taxability rules.

In this blog post, we will show you how to configure your WebStore to leverage our AvaTax integration. This is done in three places: in your AvaTax interface, your WebStore Manager, and in Microsoft RMS or pcAmerica Cash Register Express (CRE).

Your AvaTax interface

Setting up your AvaTax interface is done by logging in to your Admin Console and creating a new company for which you would like the sales tax to be calculated and reported. At the time of writing this post, the creation of a new company encompasses six steps: specifying information about the company, setting its nexus jurisdictions, provide its tax codes, define its tax rules, adding the items that are sold in your store, and finally entering the location of your WebStore. The last four steps are optional.

In the company setup stage, you will be asked to provide information such as the Business Tax Identification Number of your company and the currency that is used in your WebStore. You will also need to provide a name for your company. That name will be used to identify your Company throughout the AvaTax Admin Console, including on the Transactions, Tax Returns, and Reports tabs.

You will also provide a Company code for your Company. This code is a unique label for each Company. Please note that the company code uniquely identifies one store and in the case that you have several physical stores, each physical store will be assigned a different company code. During the setting up of your company, you will also be asked if it is part of a Multi-Company Organization, or a standalone. You should specify the rounding level that will be used to calculate tax for your company. This is basically a way to tell Avatax to round tax amounts at the line level or document level.

In the next stage you will be asked to configure your nexus which will define where AvaTax should calculate tax. You should select one or more countries for AvaTax to calculate tax for your Company. It is important to note that AvaTax assumes that transactions in nexus jurisdictions are fully taxable and those in non-nexus jurisdictions are non-taxable.

After completing these steps, your interface should show your newly configured company with its status set as Active.

In case you are having issues at this level, please feel free to get in touch with their dedicated Support Team.

Your WebStore Manager

The configuration of your WebStore Manager comprises three steps: Enter your credentials and company code, assign tax codes to your departments and categories and optionally verify your store address.

  1. Providing your credentials and company code

Having configured your company in your AvaTax Admin Console, the next stage is to enter the required information in your WebStore Manager. You should click on the Shipping & Taxes Menu and Tax Providers. Then click on Avatax and the Activate button. You will be shown a page that looks like the following screenshot:

Figure 1: The Avatax plugin Menu configuration

Please enter your credentials as requested (Account number/email address, license key, and the company code). The first options should match the information that you have provided in your nexus configuration in your Avatax Admin Console. This is to ensure that we set the Tax Calculation method appropriately for your WebStore. In the next two options, you can opt whether you want us to perform address validation requests. These requests are used at the checkout page to get the most accurate tax amount. We also make an address verification request to validate your store address. While you can decide against relying on these address verification requests, we strongly recommend that you enable those options. The last option allows you to run the integration in the test mode. This is provided as a courtesy only and should not be enabled in a production mode. As our implementation is extensively tested and fully certified by AvaTax, you should therefore never enable that option.

Having entered those credentials and options, you should click on the Save button. We will then double check that your credentials were accepted by AvaTax and inform you at once. The next screenshot shows an example of a successful connection.

Figure 2: Your credentials were validated by AvaTax

2.  Assigning tax codes to your store navigation

A Tax Code is a unique label used to group Items (products, services, or charges) together. Tax Codes typically identify categories of like products, services, or charges, and are used in Tax Rules to create custom taxing scenarios.

By clicking on the second panel (Tax Codes),  you will be presented with a page that looks like the following screenshot:

Figure 3: Assigning Tax Codes to your Departments/Categories

The assignment works as follows:

  • You first click on the department or category on the left panel then select the applicable tax code in the right panel by clicking on it or searching for it using the provided search button;
  • Having selected the tax code, the Save button will now be enabled;
  • You should either click out or click on the Save button to get your assignments saved.

Please note that any assignment to the department level will affect all its underlying categories. These tax codes will be sent to AvaTax at the checkout to request the applicable sales tax.

Microsoft RMS or pcAmerica CRE

For Microsoft RMS customers, due to limitations in RMS Store Operations’s API, we are unable to record calculated tax values in the usual way. Therefore, it is necessary create a non-inventory Internet tax item, to which calculated tax will be applied.

Also for our RMS users, an updated version of Get Web Orders (GWO v2.0.0.36) ensures that any time a web order’s contents are modified at the POS, the tax rates are re-calculated, and authorization and capture for tax only takes effect when you tender the web order. Furthermore, if you refund all or part of a web order that had auto-calculated tax, we automatically send a request to AvaTax to ensure the refund is correctly recorded in your tax reports.

For users of our new pcAmerica CRE edition, the taxes will be automatically applied to your transactions at the point-of-sale and can be reported on through CRE, in the same way you report on tax for in-store transactions.

In the case that you have created customers that are exempt from taxes, we will automatically make the necessary changes to send the appropriate request to AvaTax.

You have now completed the required step to configuration the integration, let’s see it in action.

Understanding the workflow

Having assigned the tax codes and configured your Avatax profile, here is how it works at the checkout and also at the tendering process at the POS.

Let us assume that your store is registered in Edmonton, Canada. As shown in Figure 3, you have mapped the fruit category to the tax code (PF050001) which corresponds to Food And Food Ingredients (per SSUTA) in AvaTax.

The customer visits your store and purchases an item belonging to the fruit category, say an apple which costs $0.59, the applicable shipping is Consolidated Messenger – Overnight worth $15.

The specified shipping address is in Georgia.

A request is sent to AvaTax to get the applicable sales tax which is, at the time of writing this blog post, equal to $0.93 broking down as $0.03 applicable to the apple and $0.9 for the shipping.

The customer logs in to your store placed the order and wait for the shipment. Here is a walk-through of the order process for RMS Customers.

1 – Synchronize with your webstore to download the new web order;

2 – At your RMS Store Operations POS, open the order in Get Web Orders (GWO). You’ll notice that, in addition to the items you ordered, the tax item has been automatically added with the calculated tax value from your web order. When you pull down the order at the POS, your screen should like the following:

Figure 4: Pulling down the order at the POS

3 –  When you click Tender (F12), a new GWO popup will appear showing that the tax is being recalculated. This is an additional lookup call to AvaTax to ensure tax rates have not changed since the order was placed,  or to recalculate tax if you made changes to the order before tendering:

Figure 5: Calculating the applicable tax

4 – If the tax amount has changed, the Internet Tax SKU at the POS will have its amount updated and that value will be reflected in the order total as well. When you click OK in the  Tender window, another GWO popup will appear indicating that it is capturing the tax transaction with AvaTax :

Figure 6: Committing the tax to AvaTax

Having processed the order, it will be committed to your AvaTax Admin Console and will look like this:

Figure 7: Your committed transaction in Avatax. Note that this transaction is a Sales Invoice

For Microsoft RMS Customers: Processing Tax Refunds

If you find that you need to return all or part of a web order, GWO will also automatically mark tax transactions as refunded with AvaTax. To issue  a refund:

  1. Recall the web order transaction for a refund at the point-of-sale (F11). The items in your web order will appear in the POS, along with the Internet Tax line item:

Figure 8: Recalling the processed transaction

2 – When you go to Tender, this time you’ll see a new popup indicating that GWO is making a refund tax call to AvaTax:

3 – You should then receive a success message, indicating that the tax transaction has been marked as refunded in AvaTax.

4 – The refunded transaction in your AvaTax profile will look similar like Figure 7 with all the amount being negative. This transaction will now be shown as a Return Invoice. Also notice that the applicable tax is the one of the original transaction and not the current rate.

Questions / Comments / Feedback

The AvaTax integration is currently only available on the beta channel of the WebStore.

We hope you find this new feature useful. Should you have any questions, or if you encounter any problems, please feel free to contact our Customer Services team through live chat, or by support ticket, on our Partner Portal.

2 thoughts on “Feature Spotlight: Automated Tax Calculation with AvaTax

  1. This integration concerns our US and Canadian retailers. We don’t charge our retailers for availing of this feature, however AvaTax might do so.

    You are therefore advised to check with them how much they may charge for that service.

    Hope this answers your questions.

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