Advanced Billing provides the ability to automatically collect sales tax in certain jurisdictions using the Avalara AvaTax tax service. You define the areas that you are responsible for collecting taxes in, and Advanced Billing does the rest automatically.
The in-house Avalara connection supports tax calculation for the following regions by subdivision:
- United States
- European Union
Additionally, the regions below are available for selection under the “Other” section, without support for tax by subdivision:
- United Arab Emirates
- Hong Kong
- Korea, Republic for
- New Zealand
- Russian Federation
- Saudi Arabia
- Tanzania, United Republic of
- South Africa
If your company needs to calculate taxes in a different country, consider looking into an account with Avalara using Link My Avalara.
Configuring Avalara Sales Tax
Enable Avalara Sales Tax
First, click the ‘Enable’ button in the Avalara Sales Tax section at the bottom of the page. Note that doing so will disable any existing custom taxes that you have. You will be taken through a series of steps to configure the integration.
Set your Tax Origin Address
Your first prompt will be to define a “Tax Origin Address”. This is your business’s address. Avalara needs a full adress on file to calculate the correct tax rates.
Tax Destination Address
When you use the Avalara managed sales tax service, we allow the same options as for custom taxes. To learn more please check our Tax Settings page.
Configure your Taxable Regions
Finally you will define your Taxable Regions. These regions inform Advanced Billing where your company wishes to calculate and report tax.
Marking Products and Components as Taxable
Unless otherwise specified, all products and components are NOT eligible for taxes. Once a tax is defined, you will need to update your existing products and components so that they can be taxed. To do this, edit the product or component and check the ‘This product is subject to taxes’ checkbox.
You will also want to ensure that the “Require Shipping Address at signup?” checkbox is also checked for each product. Avalara needs a full address on file in order to calculate taxes.
Creating Taxable Subscriptions
In order for a subscription to be considered taxable, the subscription must have a valid shipping or billing address. The address information must be complete, and be formatted properly in order to correctly determine the tax locale of the charge.
Full Address Required for Taxable Subscriptions
When using Avalara, Advanced Billing requires that you use complete addresses in order for your subscriber to be taxed appropriately. Partial addresses, such as country and zip code, are not acceptable as valid addresses in order to derive tax information from Avalara. The result of supplying partial addresses will be that your subscribers are not charged tax.
A complete address includes the following:
- Address 1 (50 characters maximum)
- Address 2 (optional, use when appropriate)
- State (Required ISO format, see below)
- Country (Required ISO format, see below)
- Postal Code / Zip (11 characters maximum)
Required Country Format for Taxable Subscriptions
Countries should be formatted as 2 characters. For more information, please see the following wikipedia article on ISO_3166-1.
Required State Format for Taxable Subscriptions
US states (2 characters): ISO_3166-2
States outside the US (2-3 characters): To find the correct state codes outside of the US, please go to ISO_3166-1 and click on the link in the “ISO 3166-2 codes” column next to country you wish to populate.
Coupons and Taxes
When applied in conjunction, taxes are applied to the total cost of the subscription AFTER the coupon adjustment has been accounted for.
You can view and export a history of all tax charges by clicking the ‘View Tax History’ button at the top of the Taxes page.
Here is a sample of what information the tax history page displays:
For more information on the contents of the tax exports, please see our documentation on CSV exports/reports.