Location-based filing overview

Some US states require companies to file tax returns for each physical location individually. This is called location-based filing.

Over time, tax authorities have gradually added more reporting requirements for businesses filing sales and transaction taxes. These reporting requirements have grown to include such information as transactions by location. Some states such as California and Texas require that sellers file information about the volume of transactions that occur at each place of business where the company has a presence within the state. These forms are considered location-based reporting forms.

To file these forms correctly, you must set up your company as follows:

Define all places of business within the jurisdiction that has the location-based reporting requirement.
- If there’s any doubt as to the boundaries of this jurisdiction, it's safest to define all locations within that state.
Define a Default Location, which will be used to report any transactions that aren’t tagged to a location.
Your connector must indicate, on each transaction, which location to use for reporting purposes.
- This is done by specifying a reportingLocationCode field on the transaction. This code corresponds to the code that you created when you added a new location.

Based on the laws and rules of your tax authority, you may need to consider storefronts, offices, retail locations, warehouses, field sales offices, or home office locations. For more information on requirements, check with your tax authority. Once you have this list, refer to the Set up location-based filing topic for information on how to add, edit, or import locations into AvaTax.

As you edit locations in the web portal, AvaTax prompts you to identify uniquely each location with a unique location code. This location code is for your convenience; it doesn't need to follow any state-issued format. When you create locations within AvaTax, AvaTax prompts you to answer more questions if the state requires any additional information about each location.

Once you have added company locations in AvaTax and tagged transactions with the correct reportingLocationCode, the Avalara Managed Returns service will use those location codes during tax calculation to report on sales by individual location.