Avalara AvaTax
What the connection does for you, what it does not do, and the quiet fallback that can zero your tax.
Avalara AvaTax works out sales tax for an address rather than you maintaining rates yourself. It is one of three ways this platform can calculate tax, alongside manual rates and TaxCloud, and you pick one in Settings, Tax. Avalara has its own settings page for the credentials.
It is worth being precise about what the connection covers, because the name suggests more than it does here.
What It Does
Every time tax is worked out, which is on the basket and again at checkout, the shop sends Avalara the line items, the ship-from address and the ship-to address, and uses the figure that comes back. That gives you rooftop-accurate rates for every US jurisdiction without maintaining a single rate yourself, and it keeps up with rate changes on its own.
It can also validate and correct a customer's address against Avalara's records.
What It Does Not Do
Orders Are Not Recorded in AvaTax
The connection calculates tax. It does not file it, and it does not post your completed orders into AvaTax as transactions. Nothing is committed when an order is placed, nothing is voided when one is cancelled, and nothing is adjusted when you refund. If you are expecting to open AvaTax at the end of the quarter and find your sales sitting there ready to file, you will find it empty. Your returns still have to be prepared from this platform's own tax report.
That is a real limitation rather than a setup mistake, so no amount of configuring will change it. If filing through AvaTax matters to you, say so, because the groundwork for it exists and connecting it up is a piece of work rather than a setting.
Setting It Up
Four credentials: account ID, licence key, company code, and whether you are pointing at sandbox or production. The company code is the one in your Avalara account, not your own shop name, and getting it wrong produces a connection that authenticates and then fails on every calculation.
Then the ship-from address. This is the origin Avalara uses to work out which jurisdictions you have a relationship with, so it must be where goods actually leave from, not your registered office if those differ.
Use Test Connection before you switch tax mode over. It checks the credentials rather than a real calculation, so it passing is necessary but not sufficient.
Start in Sandbox and Compare
Put the credentials in with the environment set to sandbox, switch tax mode to Avalara, and put a few orders through to addresses you already know the right answer for. A sandbox account returns usable rates, so you can see the figures without touching live transactions.
The Fallback That Catches People
If Avalara cannot be reached, or the credentials are wrong, or it returns an error, tax is quietly calculated from your manual rates instead. The shopper is never shown an error and the order completes normally.
This is the right behaviour, because the alternative is a checkout that collapses when a third party has a bad afternoon. But it has a consequence worth planning for:
Keep a Manual Rate Even on Avalara
If you move to Avalara and delete your manual tax rates, then the fallback has nothing to fall back to, and an outage means orders taken at zero tax. You will not find out from the shop, because nothing looks wrong. Keep at least a sane default rate for your own state or country, and check the error log occasionally for calculation failures.
The failures are logged every time, so the error log is where an outage shows up, not the order list.
When the Figures Look Wrong
Tax is zero on every order. Either tax mode is not actually set to Avalara, or the credentials are failing and the fallback is finding no manual rates. The log distinguishes the two in seconds.
Tax is right at home and wrong abroad. AvaTax is a US sales tax product. For VAT-style tax in other countries, look at how the market is set up instead, in Markets and Currencies.
Tax is close but not exact. Check which address the calculation is based on. The setting for whether tax follows the shipping or the billing address is on the main tax page, not the Avalara one, and it changes the answer for any customer whose two addresses are in different jurisdictions.
Everything was right, then changed. Rates genuinely do change, and that is the point of the service. The order keeps the figure that was charged at the time, so an old order showing a different rate from a new one is correct rather than broken.