Glossary

Review this glossary to understand the terms used in this integration guide and in AvaTax.

A

API client

A set of routines, protocols, and tools for building software applications. An API specifies how software components should interact and APIs are used when programming graphical user interface (GUI) components.

B

blanket exemption

A certificate that provides a seller the authority to exempt a buyer's entire transaction from sales tax. It's typically attached to the original invoice at the time of sale, and it contains the company name, effective date, reason code, and purchaser's exemption number.
business identification number

In AvaTax, the business identification number (BIN) is assigned to a non-U.S. country. For example, this is a Canadian BN (business number) or a European VAT (value-added tax) number.

C

child company

A company that inherits its tax profile from a parent company in AvaTax.
collection authorities

Jurisdictions where you’ve registered to collect and remit tax.
commit

An Avalara term interchangeable with "record," specifically as it applies to recorded or recording documents.
company code

In accounting software that works with AvaTax, this represents the code that the software uses to identify itself to AvaTax.
company profile
The information people tell us about their business that determines how AvaTax calculates tax (such as where they're registered to collect and pay tax, the products they sell and where they sell them, and whether they have exempt customers).

D

DAP

Delivered at Place. For customs duty and import tax transactions, this indicates that the seller is responsible for all delivery aspects, including packaging, documentation, export approval, loading charges, and ultimate delivery. The buyer is responsible for unloading. The buyer is also responsible for import clearance and any applicable local taxes or import duties.
DDP

Delivered Duty Paid. For customs duty and import tax transactions, this refers to a seller who assumes all responsibility of transporting the goods until they reach an agreed-upon destination. The buyer is responsible for unloading. In these scenarios, the seller is responsible for all applicable taxes and import duties.
document code

In AvaTax, the unique identifier number for an invoice, credit memo, or return.
drop shipment
A transaction in which the seller of goods passes the customer's order and shipment details to a 3rd party who then sends the goods to the customer. Also called drop shipping.

E

entity use code

A method for categorizing tax-exempt customer transactions. The entity use codes represent exemption reasons based on government laws.
ERP

A system by which organizations track and manage essential operations such as resources, development, sales and delivery, and finance. ERP systems aid the flow of internal business processes and allow for communication between a business's departments and its internal functions and data.
exempt customer

A buyer who is exempt from sales and use tax.
exempt reason

The reason a person or business is requesting a tax exemption. This can be based on the product type, business type, or the purpose of the purchase.
exemption certificate

A document issued by a controlling taxing entity that certifies a business or individual is exempt from a tax liability.
exemption number

A unique identifier for each exemption certificate document.

G

geolocation

The process of assigning latitude and longitude to a street address.
GST
A tax that’s due at various turnover stages of the production and distribution pipeline. Although it is realized as an individual sales tax, the legal tax liability falls on the supplier of the goods or services. In the EU, this tax is called "value-added tax (VAT)," elsewhere it is called "goods and services tax (GST)."

I

J

L

location

In AvaTax, a record of the physical presence of a company or its personnel.

M

marketplace facilitator (MPF)

A marketplace facilitator, or MPF, is anyone who provides a forum to list or advertise taxable tangible personal property for sale by marketplace sellers. The MPF collects receipts from the customer and remits payments to the marketplace seller. The MPF also receives compensation for these services.
marketplace location
A taxonomy facet that designates the geographic area in which an Avalara product is sold or marketed.
merchant of record

The merchant of record is the party that is billing for the items on a transaction. This merchant's name will appear on your billing statements.

N

Nexus

A connection between a business and a taxing jurisdiction that creates a legal requirement for the business to register and remit taxes within the jurisdiction. In AvaTax, a setting you configure to identify jurisdictions where you're registered to collect and remit tax.

O

online marketplace

A site that sells products or services from multiple merchants.

P

product taxability

Whether the products and services you sell are fully taxable, partially taxable, or nontaxable. This varies based on the product or service type, amount, and quantity; the transaction date; and the jurisdiction. Sometimes referred to as taxability.

Q

quote-to-cash

Describes the end-to-end transaction experience or document lifecycle. This lifecycle begins as a quote and ends with a committed transactions and a payment.

S

sales tax

A domestic transaction tax in the U.S. on retail sales of goods and services. Collected and remitted by an in-state seller with a location in the taxing jurisdiction.
seller use tax

A domestic transaction tax in the U.S. on retail sales of goods and services. Collected and remitted by an out-of-state seller with Nexus, but no physical location, in the taxing jurisdiction.
stock keeping unit (SKU)

Stock keeping unit. An identification code applied to products or services you offer, created for ease of identification and record keeping.

T

tax code

An alphanumeric code in AvaTax associated with certain items to identify which tax rules apply to those items.
tax rule

A custom rule that you can set up to change AvaTax's standard calculation.
technology partner

A business that's signed a formal contract to build a repeatable integration to Avalara's product suite.
transaction

The record of an invoice, credit memo, or return.

U

V

varying taxability

The way products and services are taxed at different rates in different jurisdictions.
VAT

Value-added tax. This tax is a type of general consumption tax. It's collected incrementally based on the value added at each stage of production. Implemented as a destination-based tax, where the tax rate is based on the location of the customer.