FAQs

This section provides answers to common questions that users face when configuring AvaTax.

Why do my transactions return a $0.00 tax calculation?

There are several reasons why a transaction may return a $0.00 tax calculation.

Company is not set up to collect tax in the jurisdiction

This is the most common reason why AvaTax returns a $0.00 tax calculation. AvaTax will only return tax calculations for jurisdictions where you tell it you are registered to collect tax. You should register to collect and pay taxes wherever your company conducts business. If you're not sure whether your company should be registered to collect tax in a specific country or a U.S. state or territory, speak to your tax professional.

Refer to the Tell us where you collect and pay tax Help Center article and the What’s a sales tax risk assessment, and why should you get one? blog post for more information.

States without sales tax

Some states or tax authorities in the United States do not collect sales, use, or transactional taxes. In this case, transactions will correctly show zero tax unless they trigger special excise taxes or other functionality. More information is available in the States with no sales tax Help Center article.

Non-taxable product

Transactions can also have zero tax if they involve products that are not taxable. Some jurisdictions choose not to tax certain products or to tax them only in certain conditions. The jurisdiction may choose to call the product “exempt from tax”, or “nontaxable”, or simply a product with a zero tax rate. AvaTax will determine the taxability of the product based on the TaxCode you provide.

Tax override of zero

If you are using a tax override to import tax calculated by a different tax engine, AvaTax may assign zero tax to your transaction in order to match the functionality of your older software.

If none of the above reasons answers your question, and you believe you should be collecting tax, you can log a ticket with Avalara support to dispute the calculation.

How do I use company profiles?

A company profile includes key information about your business. This information determines how tax is calculated and includes the following:

Where you collect and pay tax
The products and/or services you sell and where you sell them
Customers you exempt from tax, if any

If your business has more than one company, you can create additional company profiles at any time for a single AvaTax account. When creating transactions, the company code is what designates the profile that processes a transaction. If no company code is present in the request, whatever company profile is flagged as the default will process that transaction. More information about creating child companies is available in the Add a child company Help Center topic.

What should I select on the “Where you collect tax” screen if I am going to sell US-wide?

Check all the boxes in the US. Also, if you're registered to collect in Local Jurisdictions, make sure you select them as well in the states that have local jurisdictions. Be sure to that local jurisdiction selections are reviewed by your tax compliance person.

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