Calculating Tax for a Sales Order Using Avalara AvaTax

If tax calculation using Avalara AvaTax is enabled in your org, you can calculate tax for a sales order.

Tax is calculated for each sales order line item. You can optionally provide a specific Avalara tax code for every line to calculate tax with greater precision, depending on the product being shipped. You can do this manually, or rely on the mappings created by your administrator. If an Avalara tax code is not provided for a line, Avalara AvaTax uses the origin and destination addresses to calculate tax. For more information, see AvaTax Code to Product Group Mappings.

When calculating tax, the origin address is determined as follows:

  • If the related warehouse contains an address, the address of the warehouse is used.
  • If the related warehouse does not contain an address, the address of the ICP related to the warehouse is used.
  • If a warehouse is not specified, the org address is used.

The destination address is determined as follows:

  • If the Drop Ship? field is selected for the sales order, the drop ship address of the sales order is used.
  • If the Override Ship to Address is populated on the sales order, the customer address record is used.
  • Otherwise, the shipping address of the customer account specified in the Customer Site Sold To field is used.

For a full description of the values sent from a sales order to Avalara, see Sales Order to Avalara Mappings.

You can calculate tax for a sales order in several ways:

  • Manually, by clicking Calculate Tax on the sales order record page. For more information, see Calculating Tax for a Single Sales Order.
  • Automatically, when you approve the sales order. For more information, contact your administrator.
  • Automatically, when a checkbox or a formula checkbox is selected on the sales order. The field is configured by your administrator. For more information, contact your administrator.

After tax is calculated, the relevant tax rate, value, and name fields are automatically populated on each line item. This enables you to view a breakdown by jurisdiction, for up to three jurisdictions. The Tax and Tax Rate fields contain the total values for the line item. The Total Tax field on the sales order enables you to view the total amount of tax for all lines.

The External Tax Status field is set to "Calculated". If you make changes to the sales order that might impact its tax value, the External Tax Status automatically changes from "Calculated" to "Not Calculated". Some changes can indirectly impact a sales order's tax value but do not cause the External Tax Status to change to "Not Calculated", such as editing the shipping address of the related customer account.

Calculating Tax for a Single Sales Order

To calculate tax for a single sales order using Avalara AvaTax:

  1. Open the sales order that you want to calculate tax for.
  2. Click Calculate Tax.
  3. Click Calculate Tax to confirm the action.