Zuora's Avalara integration makes it easy to calculate and report tax when you have nexus in multiple tax jurisdictions.
Avalara is a third-party tax engine service that is useful when you have nexus in multiple locations. It holds up-to-the-minute tax rate data for thousands of sales tax jurisdictions around the world. Avalara automatically calculates the correct tax rates for your invoices by taking into account a variety of tax conditions including your nexus, the customer's location, tax types and tax rules.
It is particularly useful for customers who:
The tax engine handles the update process for you, removing the need for you to update new tax rates manually. You may already use Avalara in your business, and by leveraging the integration with Zuora you avoid having to maintain tax rates in multiple locations.
Avalara also helps to manage address changes. For example, if an unincorporated area annexes to a city or county, Avalara is responsible for incorporating these updates. The service can also provide tax advice and value added services such as generating and submitting tax reports.
The Avalara AvaTax integration is a server-to-server communication between Zuora and Avalara servers. The connection is through the Transport Layer Security (TLS) protocol. All customer credentials are protected and follow industry best practices.
This feature is in Limited Availability. If you wish to have access to the feature, submit a request at Zuora Global Support.
Zuora is tightly integrated with the Avalara tax engine, and can calculate real-time tax rates when performing billing operations in bill runs and API calls. By connecting your Avalara account to Zuora you can:
If required, it is possible to configure Avalara to calculate taxes for some of your rate plan charges, and use Zuora Tax or another third party tax engine for other rate plan charges. A single invoice can contain items taxed by two or more tax engines.
To start using Avalara to calculate your tax rates, see Configure Integration with Avalara.
When integrated with the Avalara real-time tax engine, your company code will be used as the tax code for calculating tax.
Tenants with Avalara enabled can pass a Value Added Tax ID to Avalara. You can use Avalara to calculate taxes according to European Union tax rules.
The Avalara Connector is a legacy solution that some existing tenants use. The Avalara Connector calculates tax rates in batches during bill runs and invoice item adjustments. This method has a number of limitations, however, and all new Zuora customers are encouraged to use the real-time Avalara integration.
See the Zuora2Avatax Configuration and User's Guide for detailed instructions about using the Zuora2Avatax connector.
If you are currently using the Avalara Connector to calculate tax rates in batches, and would like to migrate to the real-time integration, see Migrate from Avalara Connector to Avalara Integration.
Tax rates for invoices created through calls to the Zuora SOAP and REST APIs can be calculated in real-time using the Avalara API, whereas tax rates for invoices created through bill runs are calculated asynchronously in batches.
For more information on calculating taxes with Avalara when generating and posting invoices with API calls and bill runs, see Avalara Taxes in API Calls and Bill Runs.
One of the many benefits of using Avalara to calculate your tax rates is that it provides advanced reporting functionality. To find out how to generate a wide range reports, see Generate Tax Reports in Avalara.
There are currently some limitations to bear in mind when using the Avalara integration. Some of these are limitations of Avalara's service, and others are gaps in functionality that are currently in development. For more information, see Limitations of Avalara Integration.