Avalara and CA Partial Tax on MFG Machinery

All,

I would like to know if anyone out here is using Avalara and selling Mfg Machinery to customers in CA. Apparently these lucky customers only get charged a partial sales tax. There is no special tax code though or exemption for this in Avalara, and according to them you have to correct manually, after the fact by changing the entity use code on the transaction on the Avalara website. This still doesn’t update your SO or AR Inv down the line, so corrections need to be made there as well.

When speaking to the support rep at Avalara he forwarded me by mistake a Netsuite solution where they do have a way to charge the right tax on the fly. The Cust does need the Entity Code set prior and there is some transaction level stuff going on. That made me wonder; is there a way around this in Epicor that I am not aware of?

Thanks!

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We don’t have that exact tax situation, but do have some complicated ones where some jurisdictions have rates that vary by the type of good or service.

For example, I think there’s a jurisdiction that has different rates for renting a piece of equipment vs renting the equipment with an operator (ie. just a rental truck, or a rental truck with driver). And it handles everything just fine … as long as we use the proper Product Group (which is where we set the Product Tax Cat) on the Order and Invoice.

Here’s our Product Tax Categories:
image
Note that the CategoryID is assigned by Avalara (or at a minimum must match the avalara dashboard), and that the Tax rate for each of those is blank.

Here’s a Product Group entry that uses a specific Tax Category:
image

So as long as the Invoice has that ProdGroup assigned to the line, that special tax rate (calculated by Avalara) will be correct.

Hope that helps

Thanks Calvin;

I think I need to go deeper in both Epicor and Avalara in order to get this accomplished. We have a smaller group of product codes, but are set up similarly. Regular products tax fine; no issues. Where Epicor misses the boat is when a customer is only partially exempt. The partial exemption exists in AL, LA, CA, MS, and MO. Epicor passes the SO Line, Product Code and the accompanying Tax Code, and Avalara does its thing. Avalara needs an additional piece of information however from Epicor: Entity Use Code. With that and the Customer’s geolocation Avalara should have all it needs in order to charge the partial tax correctly.

If it hasn’t already been included in the integration it probably should… I am starting a ticket with Epicor as well and make that a request for improvement.

P

One thing I noticed while looking at this, is that the Tax Category on an order line or invoice line defaults to what is specified by the product group. But it can be manually changed.

So if you have a PG for “Machines”, which uses TaxCat “MACH01”, but you know that a specific scenario requires that it be taxed using TaxCat “MACH02”, it can be manually changed.

Also, I think the Tax Cat on the Invoice line is copied from the Tax Cat on the order line. So manually changing it in the order, should be automatically reflected in subsequent invoices.

I just might have found something in KB0032478… That might actually be of use: Tax Connect: How to do Exemption Overrides using Entity Use Codes?

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Hello @psiebers. I am trying to accomplish the same task of applying the partial exemption. I’ve followed the guidance in Epicor’s KB articles, but the order is still being treated as 100% exempt. Did you ever get the application to work the way that you expected, and if so, did you discover some nuance that was the key?

Regards,
Scott

Scott,

Did you set the Entity Use Code to “I” on the Customer in Customer Maintenance?

@ScottLepley - We ran into the opposite situation where Freight was not getting taxed on the full amount, and Avalara provided the following document. Maybe it could help…

Maybe something similar could be used with a custom tax rate for an Avalara Item Code for machinery… You would enter the PartNum in Avatax under Settings > What You Sell, and then set the appropriate Avalara or custom tax code.

Yep, I sure did, and I did likewise on the ship-to record and the sales order release record. Come to find out that all of the changes I made in both Epicor and CertCapture apparently were correct after all, because the CA state tax component for the order is now being calculating correctly at 2.0625% instead of 6.0000%. The synchronization of the updated certificate information in CertCapture with the corresponding AvaTax record apparently took a VERY long time.

Thanks for replying!

Go figure! Glad you are back on track again…

Yeah, go figure, indeed! I even manually triggered the sending of the exemption certificate data to AvaTax by using the “Queue API Resend” button, thinking that would ensure that AvaTax would be updated properly! <Grrrr!> I wish there was a way to confirm, on the AvaTax side, that an API call truly resulted in an updating of data.

Thank you, so much, for this link. It solved a lot of problems for me! :grinning: