Avalara is one of the largest tax calculation companies in the USA. Tax calculation via Avalara is done using the XML API. Your taxation configuration is stored within Avalara and all taxes are calculated by the Avalara middleware. This significantly simplifies taxation management for your administrators.
The tax calculation process is as follows:
- PortaBilling sends all customer xDRs, along with customer location information, to Avalara using the API.
- Avalara calculates the taxes and then returns those calculations to PortaBilling.
- PortaBilling uses this tax information to generate xDRs for taxes and then produce invoices.
Avalara calculates taxes based on the customers’ tax jurisdiction, which is determined using PCodes – permanent jurisdiction codes. These PCodes are obtained from the customer’s location (the ZIP code) and the CLI/CLD numbers in xDRs using the code mapping table provided by Avalara. This ensures accurate tax calculation.
If CLI/CLD numbers are not present in the xDRs (e.g., an xDR for subscription charges or manual credit), the customer’s location PCode is used.
As a result of tax calculation, PortaBilling receives summarized taxes grouped by tax type (e.g., federal, state, etc.) and generates separate xDRs for each tax type.
To enable tax calculation via Avalara, first establish the account with Avalara. Contact the Avalara support team to activate the Customer Mode service. Customer Mode is mandatory to group transactions that apply to the same customer and speed up the tax calculation process.
Second, contact the PortaOne support team to configure the Avalara module on the Configuration server and install the Avalara plug-in.
Lastly, to configure the Avalara taxation parameters on the web interface:
- Configure the Avalara taxation plug-in.
- Configure the taxation parameters that apply to you as the service provider on the My Company Info page.
- Select the Avalara taxation method and define the taxation parameters for your customers for the customer class or for an individual customer.
For backward compatibility, the EZTax taxation plug-in is still available. However, due to the simplified management of the Avalara updates, it is recommended that you switch to Avalara taxation.