Avalara sales tax automation integration with Inform ERP

The system creates new tax codes with a Avalara prefix of AV followed by the state. For example, New Jersey tax codes are created as AVNJ. Inquiring under the ERP’s File > Customer > Tax > AVNJ, no tax percentage numbers are seen. The Avalara looks these rates up in real-time during quote/order entry.  For non-taxable customers, the system creates a corresponding non-taxable jurisdiction.  For example, NTNJ is the New Jersey tax exempt code.

We encourage the use of Avalara Sales Tax Reporting. Avalara provides accurate, detailed reports for sales and sales tax collected by state and local jurisdiction and estimated sales tax. Inform ERP still provides our standard jurisdictional tax reporting, but sales transactions calculated using Avalara have substantially more information available, presented only when using the Avalara reporting

Avalara has the ability to automate tax filing to the states. Automated filing requires no user overrides of line items or miscellaneous charge taxable status on orders. This can be prevented by configuring access levels to limit taxability changes.

DDI is certified for Avalara AvaTax, and the integration requires certification approved settings and system workflow. The implementation has some complexities, requiring the deployment and use of a Sandbox test system before deploying the new tax automation to your live Inform ERP system.

Implementation overview

• Deployment testing using an Inform ERP Sandbox to adjust your system and test the integration including Tax Codes, Tax Nexus, Customers, Ship-to’s, Products, Ship Vias, new workflow training, and reporting

• Creation of Inform - Avalara data table, Customer and Product custom fields

• Upload existing invoices to Avalara to correctly test and calculate Tax Nexus

• Orientation training

The Customer Master file Tax Code field may be blank for both Customers and Ship-to's. (The tax code is normally a required field, and this is changed during the Avalara deployment.)

Customer Taxable Status - If a specific customer is tax exempt, you must set the Avalara Tax-Exempt code in the Customer Master > Custom Fields tab. Non-taxable Customers must have a tax-exempt reason code assigned, or Avalara will report an error. There are two reason codes in the Custom Field selector: Wholesale, Government, Marketplace, and Other. These are Avalara codes and are not user configurable. By default, we initialize all non-taxable customers as “Wholesale” during our deployment. You have the ability to update the reason code under File > Customer Master > Custom Fields tab.

Customer Tax Code - Tax rates and tax jurisdiction descriptions are defined by Avalara automation.

Ship-to Tax Code - The Customer Ship-to Master file Tax Code field may be blank.

Ship-to Taxable Status - If a specific ship-to is tax exempt, you must set the Avalara Tax-Exempt code in the Customer Ship-to Master > Custom Fields tab. Non-taxable Ship-to’s must have a tax-exempt reason code assigned, or Avalara will report an error. There are two reason codes in the Custom Field selector: Resale and Government. These are Avalara codes and are not user configurable. You have the ability to update the reason code under File > Customer > Ship-to > Custom Fields.

These reason codes are established as Ship-to User Defined Fields (UDFs).

The Inform Product-Customer Tax Matrix is not used with Avalara. We add a custom field to associate a Product with your selected Avalara Product Category Code. The category code is passed to Avalara to override the normal tax status of a product. The spreadsheet linked below is a curated list of Avalara Product Codes that a user needs to use to override taxability for a product. The user categorizes the product for Avalara so it is properly reported on within Avalara sales tax reporting. To download the spreadsheet containing all Avalara Product Category Codes and their Descriptions, you can click here.

The taxable check box on the General tab of the Product Master is only relevant for Counter sales / Pick Up orders. These Pick-up ship-via transactions bypass the Avalara system to minimize the API calls and transaction charges.

The Freight Taxable Status is determined automatically and enabled/disabled on the tax code.

Avalara Product Category Code is required for Avalara to accept Miscellaneous Charges

Avalara uses the tax codes assigned to pick up ship vias. Pick up ship vias are designated by the Pick Up check box on the ship via master. For orders with a Pick Up ship via, the system will not call the Avalara API. This saves transaction fees, particularly for distributors that have high counter sale transactions.

This override is not recommended when using Avalara automated tax reporting. It cannot be used with Avalara Autofile. If you are not using automated sales tax filing the sales tax automation can be overridden by assigning a tax code a branch.

This override is not recommended when using Avalara automated tax reporting. It cannot be used with Avalara Autofile. You can override sales tax automation by changing the sales order header sales tax code to an Inform tax code. For example, a state may offer discounted tax rates under certain qualifications, such as an Urban Enterprise Zone with a sales tax rate lower than the State Tax.

If necessary, you can override the taxable checkbox at the line item level.

The Inform ERP Avalara integration generates Avalara transaction fees in two ways, sales order edits and invoice uploads. Except for counter sale and pickup orders, most Inform price quotes and sales orders trigger one or more Avalara API calls.

DDI System is certified with Avalara AvaTax.

• Each Price Quote created triggers the Avalara sales tax calculation API. Each subsequent edit triggers the Avalara API, unless the quote edit does not potentially impact the sales tax calculation
  If the quote Ship Via is Pick up, and is configured with an Inform tax rate, the API call is skipped and does incur the fee

• Each Sales Order triggers the Avalara sales tax calculation API. Each subsequent edit triggers the Avalara API, unless the sales order edit does not potentially impact the sales tax calculation.
  If an order edit does not potentially impact the sales tax calculation, the API call is skipped and does incur the fee
  If the sales order Ship Via is Pick up, and is configured with an Inform tax rate, the API call is skipped and does not incur the fee

• Each invoice triggers the Avalara transaction API, where is invoice is uploaded to Avalara for sales tax reporting

• Inform ERP monthly subscription range can be estimated by taking your yearly invoice count and multiplying by 1.3 or 1.4