AvaTax

What is AvaTax?

Pelcro integrates with Avalara's AvaTax, a cloud-based sales tax automation software that calculates accurate taxes at checkout based on:

• Product taxability - Different products have different tax rules
• Customer location - Tax rates vary by jurisdiction (state, county, city)
• Your tax obligations - Where you have nexus determines where you collect taxes

Key Benefits

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Setup Requirements

Prerequisites

Before configuring AvaTax in Pelcro, you must:

1. Create an AvaTax account at Avalara's website
2. Configure your company in the Avalara portal
3. Set up nexus for states/countries where you have tax obligations
4. Assign tax codes to your products

Need help? Contact your Pelcro account manager for guidance or to connect with the AvaTax sales team.

Configuration Steps

1. Navigate to Settings → Integrations → Tax Management
2. Select AvaTax integration
3. Enter your AvaTax credentials (Account ID, License Key)
4. Select your Company from the dropdown
5. Configure your Origin Address (your business location for shipping/service)
6. Choose whether to create transactions in AvaTax:
   • Enabled: Invoices are automatically recorded in AvaTax for reporting
   • Disabled: Tax rates are calculated but transactions are not recorded

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How Tax Calculation Works

For AvaTax to calculate taxes on a subscription, ALL of the following must be true:

If any of these conditions is not met, taxes will not be applied.

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Understanding Tax Codes

Tax codes tell AvaTax how to classify your product for tax purposes. Different products are taxed differently depending on the jurisdiction.

Common Tax Codes

Important Notes on Tax Codes

• Tax codes determine taxability by jurisdiction - A product may be taxable in one state but not another
• Printed periodicals (PM codes) are often non-taxable in many US states
• Digital content has varying tax treatment across jurisdictions
• The wrong tax code can result in no taxes being collected even when required

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Understanding Nexus

Nexus is the connection between your business and a tax jurisdiction that creates an obligation to collect and remit sales tax.

Types of Nexus

Nexus in Pelcro

• Nexus is configured in the Avalara portal, not in Pelcro
• Pelcro displays your configured nexus on the AvaTax settings page
• No nexus = No tax collection for that jurisdiction, regardless of other settings

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Current Limitations

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Troubleshooting: Why Are Taxes Not Being Applied?

When taxes are not appearing on invoices, there are several common causes. Use this guide to diagnose the issue.

Quick Checklist

Before diving deeper, verify these basics:

• AvaTax integration is enabled in Pelcro settings
• AvaTax credentials are valid (API connection works)
• Origin address is configured
• Customer has a complete address (street, city, state, zip, country)
• Product has a tax code assigned

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Common Issue #1: No Nexus Configured

Symptom: Taxes show as $0.00, entire amount shows as "Exempt"

Cause: You don't have nexus configured in AvaTax for the customer's state/country.

How to verify:

• Check the AvaTax settings page in Pelcro - it displays your configured nexus jurisdictions
• Or log into Avalara Admin Console → Settings → Where you collect tax

Solution:

1. Determine if you have nexus in that jurisdiction (physical presence or economic nexus threshold met)
2. If yes, add the nexus in the Avalara portal
3. Nexus changes take effect immediately for new transactions

Example:

Customer address: Massachusetts, US Your configured nexus: California, New York, Texas Result: $0 tax because you don't collect tax in Massachusetts

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Common Issue #2: Product Tax Code Makes Item Non-Taxable

Symptom: Taxes show as $0.00, amount shows as "Non-Taxable" (not "Exempt")

Cause: The product's tax code classifies it as non-taxable in that jurisdiction.

How to verify:

• Check the product's tax code in Pelcro (Product settings)
• Research whether that tax code is taxable in the customer's state

Common scenarios:

Solution:

1. Verify the tax code is correct for your product type
2. If the product should be taxable, change to an appropriate tax code (e.g., P0000000 for general goods)
3. Consult with a tax advisor if unsure which code applies

Example:

Product: "Digital Magazine Subscription" Tax Code: PM039397 (Periodicals) Customer State: California Result: $0 tax because printed periodicals are non-taxable in CA

Note: If this is actually digital content, it might need tax code DC010500 instead.

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Common Issue #3: Missing or Invalid Customer Address

Symptom: Tax calculation fails or returns $0

Cause: AvaTax requires a valid, complete address to determine the correct tax jurisdiction.

Required address fields:

• Street address (line 1)
• City
• State/Province
• Postal/ZIP code
• Country

Solution:

1. Ensure the customer has a complete address on file
2. Verify the address is valid (AvaTax validates addresses)
3. For US addresses, ensure the ZIP code matches the city/state

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Common Issue #4: Origin Address Not Configured

Symptom: AvaTax returns an error or $0 tax

Cause: AvaTax needs your business origin address to calculate taxes correctly (determines origin-based vs destination-based taxation).

Solution:

1. Go to Pelcro Settings → Integrations → AvaTax
2. Configure your company's origin address
3. This is typically your primary business location or fulfillment center

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Understanding "Exempt" vs "Non-Taxable"

These terms mean different things in AvaTax:

Why this matters: If you see "Exempt" and expect taxes, check nexus configuration. If you see "Non-Taxable," check the product's tax code.

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Frequently Asked Questions

General Questions

Q: Where do I configure nexus?

A: Nexus is configured in the Avalara Admin Console, not in Pelcro. Pelcro reads your nexus configuration from AvaTax and displays it on the settings page for reference.

Q: How quickly do changes in Avalara reflect in Pelcro?

A: Changes to nexus, tax codes, and other settings in the Avalara portal take effect immediately for new transactions. Existing invoices are not recalculated.

Q: Can I see what nexus is configured without logging into Avalara?

A: Yes, the AvaTax settings page in Pelcro displays a table of your configured nexus jurisdictions.

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Tax Calculation Questions

Q: Why is my customer being charged $0 tax when they should be taxed?

A: The most common causes are:

1. No nexus - You haven't configured nexus for their state in Avalara
2. Tax code - The product's tax code makes it non-taxable in their state
3. Missing address - Customer doesn't have a complete address

See the Troubleshooting section above for detailed diagnosis steps.

Q: My product is a digital subscription. Why isn't it being taxed?

A: Check the product's tax code. If it's set to PM039397 (Periodicals/Print Media), it may be treated as non-taxable. For digital content, consider using DC010500 or consult with your tax advisor for the correct code.

Q: The customer is in a state where I have nexus, but taxes still show $0. Why?

A: Even with nexus configured, the product's tax code determines taxability. For example:

• Printed periodicals are non-taxable in most states
• Certain digital goods have varying treatment
• Some products may be classified as exempt in specific states

Check the product's tax code and verify it's appropriate for your product type.

Q: What's the difference between "Exempt" and "Non-Taxable" in AvaTax?

A:

• Exempt means the item would normally be taxable, but an exemption applies (no nexus, customer exemption certificate, etc.)
• Non-Taxable means the product category itself is not subject to tax in that jurisdiction (e.g., groceries, periodicals)

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Configuration Questions

Q: What happens if I disable "Create transactions" in AvaTax settings?

A: Pelcro will still calculate tax rates for invoices, but transactions won't be recorded in your AvaTax account. This means:

• Customers see correct tax amounts
• But the transactions won't appear in Avalara reports
• You'll need another method for tax reporting/filing

Q: Do I need to set up tax codes for every product?

A: Products without a specific tax code will use the default (P0000000 - Tangible Personal Property). However, if your products have special tax treatment (software, digital content, periodicals, etc.), you should assign the appropriate tax code.

Q: What origin address should I use?

A: Use your primary business location or the location from which you ship/provide services. This affects origin-based taxation rules in some states.

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Troubleshooting Questions

Q: How can I test if AvaTax is working correctly?

A:

1. Create a test subscription with a known address
2. Check that the invoice shows the expected tax amount
3. Verify the transaction appears in your Avalara portal (if transaction creation is enabled)

Q: AvaTax was working but suddenly stopped calculating taxes. What happened?

A: Check for:

1. Expired credentials - Verify your AvaTax credentials are still valid
2. Nexus changes - Ensure nexus is still configured for the relevant states
3. Product changes - Verify the product's tax code hasn't been modified
4. Avalara service status - Check Avalara's status page for outages

Q: Can Pelcro support help me configure nexus or tax codes?

A: Pelcro support can help with:

• AvaTax integration configuration in Pelcro
• Troubleshooting why taxes aren't being calculated
• Explaining how the integration works

For nexus determination, tax code selection, and tax compliance questions, we recommend consulting with a tax professional or Avalara's support team.

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Related Resources

• Avalara Admin Console - Manage nexus, tax codes, and reporting
• Avalara Tax Code Search - Find the right tax code for your products
• Avalara Status Page - Check for service outages

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Need Help?

If you've gone through this troubleshooting guide and still have questions:

1. Check your AvaTax settings in Pelcro to verify configuration
2. Review the configured nexus to ensure it includes the customer's jurisdiction
3. Verify the product tax code matches your product type
4. Contact Pelcro support with:
   • The account ID
   • The specific invoice or subscription with the issue
   • The customer's state/country
   • The product and its tax code

Our team can help diagnose why taxes aren't being applied and recommend next steps.