Avalara-Aturian Tax Calculation Basics

Tax Calculation w/ Avalara

If you subscribe to Avalara's “Avatax” services for calculating or filing taxes, Aturian follows the process listed below:

Tax Calculation in the order.

Taxes are calculated when creating an order to get the most accurate order total.

Aturian inquires about tax for each item as the items are added to the order and saves the tax rate that Avalara provides. If the ship-to address is not provided, or it is not recognized by Avalara, Aturian receives an error. Taxes are NOT calculated for that item.

The process is repeated for every item in the order.

If ANY item in the order does not have taxes, the taxes are not displayed for that order in the order summary. Aturian displays tax status for each item in the order details view.

Tax Calculation in the Customer Invoice

The following process is followed to calculate taxes in the customer invoice

When the customer invoice is created, Aturian uses the tax rate provided by Avalara when the corresponding order is created for each item that is selected.

If an item does not have the saved tax calculation in the corresponding order then Aturian displays an error for that item. The invoice is displayed with a tax error (displayed next to the tax field)

If a new item is added to the invoice or the invoice does not have a corresponding order, then Aturian uses the invoice address to get taxes from Avalara and displays the corresponding tax status next to the tax field in the invoice.

Users can manage tax related issues from the context menu available from the icon next to the tax field in the customer invoice:

Manage Addresses: Most of the tax related errors are because of ship-to addresses. Avalara cannot provide tax information if the ship-to address is not correct or not provided. (Zip & State in particular) This option lets the user update the ship-to address for each item. NOTE: Changing address here will also change the ship-to address for that item in the order.

Select Sales Tax Routine: User can select a different sales tax routine if the user wants. This should not be used unless the user wants to explicitly over-ride the tax routine used during order.

Recalculate Taxes: This is used to recalculate taxes with all the selected items in the invoice.

View Tax Errors: Not very different from Manage Addresses. User gets a chance to see tax errors on a per ship-to address basis.

Saving Customer Invoices : Invoices are saved in READY state. The current state of taxes is saved with the invoices. If there are errors in tax calculation for ANY line item, Aturian will flag the invoice and warn the user when saving invoices. However Aturian will NOT block the user from saving the invoice in READY state. The corresponding tax error is displayed in the invoice list. IMPORTANT - Invoices with tax errors cannot be selected for posting when closing the sales journal.

Closing Sales Journal

Posting Invoices to Avalara - Invoices are posted to Avalara as part of closing the Sales Journal if so defined in the Administration section.  (Administration > Integration > Tax API: Post Invoices to Avalara at the close of the sales journal.)

Re-Calculating taxes when posting to Avalara: Taxes are re-calculated as part of posting the invoice to the sales journal only if the corresponding option is selected in the Administration section. This is particularly valuable if the client has signed up with Avalara to file its sales taxes. If the client is filing taxes using in house tax calculation, this option need not be selected

Exceptions and Special Conditions

The following rules apply to the special conditions that the user is likely to encounter when using Avalara within Aturian

• Aturian will use the invoice ship-to address AND the default “Promotional Product” category code for calculating taxes in the following conditions:
• Invoices that do not have a corresponding order - A new item is added to the customer invoice for which there is no corresponding item in the order
•  User can easily over-ride taxes by entering the tax value in the tax field. Over-riding tax will NOT recalculate taxes in Avalara when closing the sales journal. This ensures that the invoice in Avalara will match the invoice in Aturian.
• TBD - If the user selects TBD for item address taxes will not be calculated for that item
• International - Items marked as International ship-to address are processed according to the selection in the administration section.

If “Post Items with international addresses to Avalara” is selected in the admin section, then the item is posted as a domestic item and Avalara return values are saved as default. IMPORTANT - For this to work correctly, this item should ONLY be selected if the client has signed up with Avalara to provide for international taxes.

If “Post Items with international addresses to Avalara” is NOT selected in the admin section, then that item is NOT posted to Avalara and the tax value calculated for that item is $0.00. If the invoice has international address, then that invoice will not be posted to Avalara.

 Error Codes & Logic

Success - A green check mark denotes that taxes were calculated successfully for an item. A success checkmark on the order or the invoice indicates that taxes were calculated successfully for ALL the items in the order or all the items being billed in the invoice respectively.

Failure - A red cross mark denotes that taxes were NOT calculated successfully for an item. A red cross mark for taxes the order or the invoice indicates that taxes were NOT calculated successfully for ATLEAST ONE ITEM in the order or ATLEAST ONE ITEM that is being billed the invoice respectively.

Over-ride - User can over-ride taxes in the customer invoice as calculated by default in Aturian. The following implications must be understood when over-riding taxes

Alert! Taxes will NOT be recalculated when the invoice is posted to Avalara, even if the selection in Administration defines it as such.

Aturian will use the taxes that you provide to re-calculate taxes for each item in that invoice.

Aturian will indicate an invoice in which the user over-rides taxes with an icon that explicitly illustrates the user choice. Aturian will ALLOW the user to select this invoice when closing the sales journal.