What is everyone doing to handle freight sales tax with Avalara? We have our Freight partnum as a miscellaneous header charge set up in Avalara, so it calculates tax.
Unfortunately, Avalara does not allow “parts” (e.g. ‘FREIGHT’ Misc Header Charge Line Item) to be non-taxable for states that belong to the Streamlined Sales Tax Project.
How are you all handling it?
Well, I’m lost but intrigued since I am supposed to care about taxes, etc. 
We use Avalara also.
I’m hearing two different things here:
So… you use miscellaneous charges? Or you use a part number?
Misc. charge is the “right” way, as I understood it, so that’s what I set forth as the standard here. No, I will not go check to see if people are obeying that. I am far too scared.
We used to have a part number called FREIGHT (and a FREIGHT-IN part and just about every other kind of notion of freight). I know that was a mess with taxes even before we used Avalara. The state-by-state rules were the problem, as you mentioned, and misc charge was the documented way to handle it.
As for the Streamlined thing, should I already know what that is? I’m sure it’s the best thing ever, but I mean, can I still do my job and yet never know about it? 
If not, can you maybe explain what part I need to care about?
Yes, we use Misc charges on the order header… Avalara sees the MiscCode Charge ID as a partnum. Ours is ‘FRTS’.
Here’s Avalara’s take:
https://knowledge.avalara.com/bundle/voh1659520148233_voh1659520148233/page/About_Streamlined_Sales_Tax.html
It makes submitting sales tax returns easier for the 24 SST full member states: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.
Here’s the official SST page: https://www.streamlinedsalestax.org/
OK, so if you had never mentioned SST, I’d tell you that our misc charge for freight works fine. (Also, I remember now that I baked it into an integration which is why they are using it properly lol.)
Here Maryland is exempting tax on freight and North Carolina is charging tax on freight. This aligns with Avalara’s public site, for example.
Here is the Maryland invoice, and freight misc charge is NOT taxed
And here is the North Carolina invoice, and freight misc. charge is taxed
This works because of the setup of the charge and the corresponding “Tax Category” that uses a code from Avalara’s site (I’ll dig up the link if you want).
Now that I said all that, what does SST have to do with any of this?
@askulte FYI I edited the previous post. The pictures were right but I put the wrong captions.
Avalara says that SST states can not have the misc charge set to Non-taxable.
We’ve only got two product tax categories set up in Epicor - taxable and non-taxable. And default in company config is set to taxable (if it’s blank on the part/misc charge).
I’ll set one up for freight specifically. I think that’ll fix it.
The link from Avalara states:
All transactions for SST states must be processed and reported through AvaTax
This means all of your transactions need to make it into AvaTax, whether through your business application or manually importing transactions. See Import guidelines.
Must map items to AvaTax Tax Codes
This means you should map items you sell to Avalara tax codes when setting up your company in AvaTax. Two important points:
Avalara tax code NT (non-taxable product) can’t be used on SST transactions.
Any item without an Avalara tax code is automatically mapped to P0000000, which is taxable everywhere.
This statement has me concerned. It sounds like we can no longer have tax-exempt customers bypass Avalara with NT (like Amazon orders, who does their own sales tax capture), and now we have to purchase and consume tax cert exemption checks from Avalara for them? Money grab?
Hi Andris. Does Avalara file your tax returns for you or do you handle those yourself? If Avalara files the returns, then I believe that you really should have all of your invoices submitted to Avalara, because some states require that gross sales be reported to them, rather than just taxable sales. If you are using the NT code to bypass Avalara for some customers, then your sales potentially could be underreported for some states. If you’re handling the returns yourself, then it’s up to you to determine the gross-vs-taxable reporting requirement and report your sales numbers accordingly.
Having said that, there are numerous SST states in which freight is not taxable. Have you ever obtained a taxability matrix from Avalara for their various product codes?
Right, that’s the idea. In Kinetic, misc. charges and product groups can tie to Tax Categories. The category needs to have the same ID as one you’d find here. You just do your best to find something that matches your scenario. Then Avalara deals with the laws regarding that scenario (like freight charges).
That might be what @ScottLepley is saying also - sorry I started typing this earlier and got pulled away.
Back in 2020, we registered with SST through Avalara, who we had selected as our CSP to realize the corresponding cost savings for the 24 SST states. After our registration, we were told quite clearly that “If you have any tax-exempt products, you must map these items to SST certified AvaTax Tax Codes. You will not be able to create a product exempt transaction by setting a product to non-taxable or by using a tax code of “NT”. All transactions passed with a tax code of NT will default to a taxable transaction” and that “In order to exempt a customer in SST, you must create an exemption in AvaTax Exemptions or in CertCapture. This is the only way to exempt a customer, like a reseller, from sales tax in the SST states you are participating in.” There were other stipulations as well, all of which were required due to Avalara’s standing as a CSP with SST.
Ohhhhhh! SST isn’t just a standard to adhere to; it’s a service you pay someone to comply with. I see now. And in your case, Avalara then is doing 2 separate things
Also I just saw this - you are not allowed to mess up! (For example, letting an exemption cert expire in Avalara’s portal and then fix it, and then want to go refund the tax that was not rightfully charged.)
I wonder what you do for internal “customers” like we have that are not actually different businesses…
I would refer to SST as just a framework. Each member state still has some flexibility within the framework. However, it is the SST itself that sets the requirements with which the CSP’s must comply, and that compliance is effectively passed down to the CSP’s customers, as far as SST states are concerned.
Using Avalara for the 24 SST states provides us with registration, calculation, and return filing services for free in those states. The cost associated with Avalara’s exemption certificate management is not covered. Considering the total costs of compliance for SST states vs. non-SST states, I believe there’s no doubt that it’s worthwhile using Avalara in the SST realm.
Hi Andris,
I just noticed something today that I believe I read previously but completely forgot when replying to your topic. I’ll get to that below. But first, I need to clarify what I said about the “gross vs. taxable” issue and the need to report all of your sales. While that’s still true, it isn’t really why Avalara requires it. You nailed it 100% when you referenced Avalara’s requirement that “all transactions for SST states must be processed and reported through AvaTax”. That’s simply because the SSTGB requires Avalara to do so as one of its CSPs.
Now, regarding this…
…I want to share what I saw today:
How do I handle exemption certificate as an SST seller?
We might want to re-consider if we can use the free-of-charge Avalara Exemptions, which collects data only, instead of the Avalara Exemption Certificate Management System, which collects data and images.
