Overview

You can utilize Avalara to calculate taxes on your invoices.

This guide will walk you through the following steps:

1. Configuration
   1. Ensure Avalara is correctly configured for taxation
   2. Generate a License Key in Avalara
   3. Connect MonetizeNow to Avalara
   4. Configure your product catalog in MonetizeNow and Avalara
2. Tax Calculation
3. Correcting Tax Errors
4. Troubleshooting

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Best Practice

As with all integrations, it is a best practice to test your tax configuration using a sandbox.

Configuration

Connect MonetizeNow to Avalara

1. Click the gear on the sidebar to open settings, and choose Tax under the Integrations section
2. Provide your Account Number, Environment, and License Key
3. Provide your Company Code
   1. If you only have one company configured in Avalara, then use the word DEFAULT

1. Click Test Connection to ensure that your configuration is valid and press Save

Configure your product catalog in MonetizeNow and Avalara

In order for taxes to be correctly calculated by Avalara, you will need to configure your product catalog in both MonetizeNow and Avalara.

You will need to make sure that the products in MonetizeNow can be correctly mapped to the products in Avalara.

Configure product field

Choose which field from each product you would like MonetizeNow to send to Avalara for tax calculation.

Tax Item Code and Product SKU are usually the best options to choose from.

If you already have product identifiers in your systems, then it would make sense to set that as the Product SKU and choose that as the mapping value.

If you have many products that are the same with only minor variations, you may want to have multiple products in MonetizeNow map to just one product in Avalara, assuming the tax treatment is 100% identical. In this case, you may want to choose Tax Item Code as the mapping value.

Configure your products in MonetizeNow

Based on how you configured the Tax Calculation Field, make sure that your product has a value in the appropriate field so that it can be mapped to Avalara.

Any time you add products to your catalog, you will need to ensure that there is a mapping to Avalara's product catalog.

It is a best-practice to include all of your products in Avalara and configure taxability within Avalara, but if you don't want MonetizeNow to send the product to Avalara for calculation, then you can select the "Tax Exempt" checkbox in MonetizeNow.

Configure Avalara's Product Catalog

Create all your products in Avalara with the proper tax treatment in the "What You Sell" section of Avalara.

Ensure that the Item Code in Avalara is set to the same value as configured in MonetizeNow. The value chosen will vary depending on what Tax Calculation Field you selected in MonetizeNow.

Tax Calculation

Tax Addresses

In order for Avalara to properly determine tax liability for an invoice, you must have accurate address details. MonetizeNow will send the Shipping Address to Avalara.

• The Shipping Contact's address on an invoice is used for tax calculations.
• Invoice contacts are sourced from the Bill Group's shipping and billing contacts.
• Bill Group contacts are set from the Quote's contacts. The Primary contact turns into the Shipping Address on the Bill Group once the quote is Processed.

Testing your configuration

1. Ensure that you have configured your Tax Integration as described previously in this guide
2. Create a new quote and add some products
3. Create or select a primary and billing contact and ensure that a valid address is configured for a taxable jurisdiction, based on your Avalara configuration
4. Move the quote through to Processed
5. Navigate to the account and click on the Invoices tab
6. Open the invoice and review the calculated taxes

Handling Incorrect Tax Amounts

It is possible that during the sales process, the address collected on the Quote was incorrect or incomplete.

As long as the invoice has not yet been paid and does not have any credits applied, then you will have the ability to edit the contact details to re-calculate the tax.

1. Open the invoice actions menu and choose Edit Contact Details
2. Choose a different contact or edit the address details of the existing contact
3. Save
4. Open the invoice actions menu and choose Re-calculate Tax

Correcting Tax Calculation Errors

It is possible that tax calculation may have failed. When this happens, you will need to take action to fix the invoice and re-calculate the taxes.

You will need to review the error message displayed on the invoice to determine what action to take to make the correction. If possible, MonetizeNow will provide a Review link you can click on to get directed to where you need to correct the problem.

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Information

When an invoice has a tax calculation error, it will remain in Draft status until you correct and finalize the invoice. The invoice cannot be emailed to your customer and cannot be paid while in Draft.

Additionally, no additional invoices for this bill group will be created until you resolve this invoice.

While not recommended, you can finalize the invoice without resolving the tax calculation error.

The most common errors are:

1. The address is invalid
   1. Update the shipping contact's address to correct this
2. The product was not found in Avalara
   1. Ensure the product exists in Avalara
   2. Review the Avalara configuration in MonetizeNow to see which product field is being sent to Avalara
   3. Review the Product in MonetizeNow and ensure that the value we are sending to Avalara matches the Avalara configuration
3. Your Avalara API key is not valid
   1. Review the Avalara configuration in MonetizeNow and make sure you can test your connection successfully

Tax Exemptions

For tax exempt customers, you will need to provide the Tax Exemption Number and Tax Exemption Reason in MonetizeNow. This information will be included on tax transactions submitted to Avalara.

If you have an exemption certificate for your customer, you will need to create your customer in Avalara and upload the certificate. Make sure to use the MonetizeNow Id as the Customer Id when creating the customer in Avalara.

Troubleshooting

An invoice does not include tax, but I expected tax to be calculated

1. Ensure that the invoice start date is not before your Tax calculation start date for the jurisdiction in question based on what is configured in Avalara
2. Ensure that the Shipping Address has a correct address
3. Review the Transactions listed in Avalara for additional calculation information

The Address on an Invoice (and as a result Tax) is incorrect, how can I fix this?

MonetizeNow defers to the upstream CRM systems (Salesforce, Hubspot) as the source of truth for address information. While MonetizeNow will flag any incorrect addresses for tax purposes, these addresses should be updated directly in the CRM, to flow downstream into MonetizeNow. Avalara offers a plugin for CRMs to verify address information to proactively prevent tax calculation errors.

What happens to Tax liability on a Cancelled Invoice?

MonetizeNow currently only supports Cancelling Invoices via Credit Notes. As a result, all Invoice Cancellations follow the creation of a Credit Note which will create an offsetting Tax liability based on the item and account's tax exemption status.

I do not understand how the tax is calculated on a Credit Note

On the creation of a Credit Note from an Invoice (including Credit & Rebill), MonetizeNow takes the following actions:

1. The Credit Note is created using the Address Information from the corresponding Invoice.
   1. This is regardless of the latest Address Information on the Account.
   2. This ensures credited Tax amounts are accurate.
2. MonetizeNow shares the Credit and Address Line Items to Avalara to calculate the appropriate Tax amounts for each Credit Note line item.
   1. This is equivalent to how Tax on an invoice is generated.
   2. The Date used for the Credit Note is aligned to the Invoice to ensure exemptions or classifications remain consistent with the Invoice.
3. If there have been any updates to Product classification or Account Tax Exemptions in Avalara, that are back-dated this could impact the calculated Credited Tax amount.
   1. Best practice for Exemption and Classification Updates is to only be forward looking. Back-dating these updates could create a Credit Note with more or less tax than the original Invoice.

How is Tax handled for Freight and Non-standard products?

MonetizeNow expects Freight and Non-standard items to be listed on Contracts and Invoices as stand-alone line items. As a result, Tax classification for these line items can be directly configured in Avalara and treated exactly like a standard item (vs. worrying about bundling / breaking apart this Items).