Set up your Avalara tax codes

After you've connected your Avalara account with Shopify, you can set up the Avalara tax codes for your products. This lets you charge taxes in your store using Avalara’s services instead of Shopify’s built-in tax engine.

Default tax codes

Avalara tax codes are unique labels that you can apply to the products and variants in your store. Tax codes identify the category that a product belongs to and determine the tax rules that apply to a product based on the location in which it is sold.

When you use Avalara AvaTax, your products are initially tagged with a default tax code (physical good tax code P000000). If you're selling products or services that need to use a different code, then you can change the tax code for those products.

Set up your tax rates

Before you start configuring your Avalara AvaTax tax codes, make sure that you complete the following tasks in your Shopify admin and in your Avalara account:

  1. In your Shopify admin, set up your tax rates . If Avalara's service is temporarily unavailable, then Shopify's tax settings will be used as a backup for providing tax rates for your products.

  2. In your Avalara AvaTax account, set up your nexus jurisdictions to inform AvaTax when and where your company will calculate and report tax. If you make sales in jurisdictions that you haven't set up in Avalara AvaTax, then the resulting tax calculation will return a value of zero. If you need help setting up your nexus jurisdictions, then you can refer to Avalara's Help Center or contact your Shopify Plus merchant success manager for support.

  3. Verify that all the necessary tax information that you've provided is the same in both Shopify and Avalara. In the AvaTax app in your Shopify admin, open the Nexus Information page. This page contains a comparison of your Shopify and Avalara tax information. Each state is marked with one of the following Status labels:

    • Complete - Your tax information for this state is the same in both Shopify and Avalara.
    • Action required - You have tax information for this state in Avalara that isn't included in your Shopify tax settings. You need to update these settings in Shopify so that they match the information in Avalara.
    • Attention requested - You have tax information for this state in Shopify that isn't included in Avalara. You can update Avalara to include this information, leave the information as is, or delete it from Shopify, depending on whether you expect to have customers in this location.

Set the AvaTax code for a product

AvaTax adds a default tax code to each product in your Shopify store. For example, the default tax code for physical goods is P000000.

For each product or variant in your Shopify admin, make sure that the Tax code is set to the Avalara tax code for that product.

To add a tax code to a product:

  1. Look up the tax codes for your a product in the AvaTax System.

  2. In your Shopify admin, go to Products and open the product page.

  3. In the Pricing section, click the Tax code drop-down menu and select the appropriate tax code:

    Select a tax code from the drop down menu in the pricing section

    Note

    If you leave the product code blank, then Avalara will assign a standard code (physical good tax code) of P000000 to your product or variant.

  4. Click Save.

Apply tax codes for multiple products and variants

You can apply tax codes to multiple products and variants at once by using the Product or Product variant resources in the Shopify Admin API, or by using the Bulk Editor for Products in your Shopify admin.

In the following example, the tax code PC040101 is added to the Acme Apron variant:

PUT /admin/variants/variant[id]

{
"variant": {
"option1": "Acme Apron",
"price": "99.00",
"tax_code":"PC040101"
}
}

In the following example, the tax code PC040413 is added to the product variant Youth:

{
"product": {
"title": "Tests-12345",
"body_html": "Hi",
"vendor": "Burton",
"product_type": "Snowboard boots",
"variants": [
{
"option1": "Youth",
"price": "10.00",
"sku": 123,
"tax_code": "PC040413"

},
{
"option1": "Adult",
"price": "20.00",
"sku": "123"
}
]
}
}

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