This article explains how to create tax codes in Zuora Billing, and how to associate these with the tax codes you have defined in Avalara.
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 to identify which tax rules and rates to apply to a specific charge.
There is a one-to-many relationship between tax codes and products. For example, the tax code “Apparel” can map to hundreds of product stock keeping units (SKUs) for clothing in various sizes and colors. For many companies, a single tax code, such as “Internet Service” is applicable to all products sold.
Tax codes are defined in both Avalara and in Zuora Billing. Avalara calculates tax rates according to the tax code defined in the AvaTax Admin Console, however you cannot use these directly in Zuora. You must define a separate tax code in Zuora Billing and associate it with the tax code in AvaTax.
To find out how to create new tax codes in Avalara see Add a Tax Code.
This feature is in Controlled Release. Submit a request at Zuora Global Support to get this feature enabled for your tenant.
To create a new tax code that uses the Avalara tax engine, do the following:
It is not possible to define new tax codes though calls to the Zuora API; tax codes must be defined using the Zuora application UI.
An item code is a label that represents an individual or group of products, services, or charges. Items can be defined in the AvaTax Admin Console. Mapping items to tax codes in Avalara informs AvaTax which tax rules to use when processing transactions that include the mapped items.
For tax codes configured to use Avalara as their tax engine, you can send tax code and item code information to Avalara in separate fields. Specify the Avalara Item Code in the Tax Code Name field, and the Avalara Tax Code in the Avalara Tax Code field.
If you use the legacy Avalara Connector, the information sent in the Tax Code Name field is stored as both the tax code and item code in Avalara. It is not possible to send separate values for item code and tax code.
If you migrate from using the connector to using the integration solution, and have existing item code to tax code mappings in Avalara, you may need to update these mappings to use the new values. For more information on migrating to the real-time integration, see Migrate from Avalara Connector to Avalara Integration .