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Knowledge Center > Billing and Payments > Billing Operations > Taxes > Avalara Integration > Configure Integration with Avalara > Configure Tax Codes in Zuora Billing for Avalara

Configure Tax Codes in Zuora Billing for Avalara

Overview

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.

About Tax Codes

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. 

Configuring Avalara Tax Codes in Zuora Billing

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 ReleaseSubmit 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:

  1. Click your username at the top right and navigate to  Billing > Setup Taxation Codes.
  2. Click add new tax code.
  3. Enter the following information:
    • Tax Code Name: A meaningful string used to identify the tax code, and is mapped to the product charge. E.g., "Freight service"
    • Tax Engine: Selects which of your configured tax engines will be used to calculate tax rates for this tax code. Choose the name of the Avalara tax engine you set up, e.g. Avalara .
    • Avalara Company Code: A unique code that identifies the company in the AvaTax account.
    • Avalara Tax Code: A unique label used to group Items (products, services, or charges) together, as defined in your AvaTax account.
    • Accounting Code: This accounting code is associated to the taxes in the Invoice Details Export.
    • Description: This is displayed on the Invoice PDF and the Invoice Details Export.

create-avalara-tax-code-1.jpg

  1. Click Save.
  2. The new Tax Code is immediately active. Review the information on the confirmation screen.

create-avalara-tax-code-2.jpg

  1. Click Edit if you need to change anything, or click Back to Tax Code list to add another tax code.

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.

Item Codes

An item code is a label that represents an individual or group of products, services, or charges. Items can be defined in thAvaTax 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 .

Last modified
00:00, 16 Nov 2016

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