Automating Tax Calculation using Avalara AvaTax

You can reduce the number of manual steps required to calculate or commit tax and streamline the entire process. The sections below provide more information about the options available.

You can configure the relevant settings from the Tax Calculation Settings page. For more information, see Configuring Order and Inventory Management Settings on the Tax Calculation Settings Page and OIM Tax Calculation Settings Fields.

Automating Tax Calculation

You can automate tax calculation for the objects that support tax calculation. Tax can be automatically calculated in one of two ways:

  • As part of an existing Order and Inventory Management process, for example, when approving a sales order or matching an AP voucher.
  • When a checkbox or a formula checkbox field on the record is selected. You can define the field that triggers tax calculation for each object.

In either case, the record must be eligible for tax calculation. Otherwise, tax is not calculated. This includes both the predefined eligibility criteria and any additional criteria that you might have defined.

Existing Order and Inventory Management Processes

The table below provides more information.

Automatic Tax Calculation in Existing Processes

Object

Process

Notes
Customer Quotation Printing a customer quotation

This only happens the first time you print a customer quotation.

This only applies to the Print Lightning action.
Sales Order Approving a sales order  
Invoicing Completing the shipment related to an invoice  
Credit Invoice Crediting or voiding an invoice This means that when you credit or void an invoice whose tax was committed to Avalara, tax is automatically calculated for the resulting credit invoice.
Purchase Order Approving a purchase order  
AP Voucher Matching an AP voucher  
AP Voucher Credit Voiding an AP voucher

This means that when you void an AP voucher whose tax wax was committed to Avalara, tax is automatically calculated for the resulting AP voucher credit.

Warning:

When you credit an AP voucher, the Quantity Vouchered field is not populated. Because this field is required for tax calculation, tax is not automatically calculated. In this case, you must enter a quantity and calculate the tax manually.

Custom Criteria

If you require complex automation scenarios, you can create a checkbox or a formula checkbox field on each of the objects. As soon as the field is selected on an eligible record, tax is calculated automatically.

Your company operates in California. You are certain that you must always collect sales tax when selling and shipping to an entity in California. However, you also occasionally ship out of state. You want to automatically calculate tax only for in-state shipments, but you want to manually calculate tax for all other shipments. To achieve this:

  1. Create a new checkbox formula field on the Invoicing object.
  2. Name the field California Shipment and enter the following formula: SCMC__Ship_to_State_Province__c = "CA" || SCMC__Ship_to_State_Province__c = "California"
  3. Navigate to the Tax Calculation Settings tab.
  4. Expand the Invoice section.
  5. For Automatic Tax Calculation, select "Custom Criteria".
  6. For Custom Criteria Field, select "California Shipment".
  7. Click Save.

With this setup, as soon as a California invoice is shipped, tax is automatically calculated for it.

Automating the Process of Committing Tax to Avalara

If you commit tax to Avalara, you can also streamline and automate the process. You can provide a checkbox or a formula checkbox for the following objects:

  • Invoicing
  • Credit Invoice
  • AP Voucher
  • AP Voucher Credit

As soon as the field is selected on an eligible record, tax is automatically committed to Avalara.

Note:

If automatic tax calculation is enabled for an object and posting tax is not required in your org, tax might be automatically calculated and committed at the same time.

Building on from the previous example, in addition to calculating tax for a California shipment, you might also want tax to be committed as soon as it is calculated. To achieve this:

  1. Navigate to the Tax Calculation Settings tab.
  2. Select Posting Tax to Avalara Optional. This ensures that the posting stage is skipped.
  3. Expand the Invoice section.
  4. For Automatic Commit Criteria Field, select "California Shipment".
  5. Click Save.

With this setup, as soon as a California invoice is shipped, tax is automatically calculated and committed for it.