HS codes in the transactions

As indicated previously, countries use unique Harmonized System codes to calculate tariff rates for most internationally traded products. AvaTax uses the HS code and destination country to determine the most more accurate tariff rate for that product.

An HS code that includes a country-specific identifier in addition to the six-digit code is often referred to as a tariff code (or a fully qualified tariff code). In AvaTax, line items must have a tariff code to calculate customs duties for the destination country.

If your transaction input doesn't include a tariff code, AvaTax can still retrieve customs duty information as long as your transaction input includes a product description, summary, and category. Avalara's classification engine uses that information to look up your product and apply the correct tariff code to the transaction.
If the tariff code in your transaction input is incorrect, AvaTax will trim the code until it finds a valid customs duty rate for the product. If you trim the code below the six-digit mark, Avalara's classification engine predicts the item based on the product description, summary, and category.
If there are multiple child products for a particular tariff code, AvaTax applies a pricing strategy using the product and tariff code information to choose the best rate for your business strategy. This pricing strategy identifies a minimum, maximum, and average customs duty cost.

More information is available in the Understand Avalara Cross-Border Estimated duty calculations Knowledge Center article.