Avalara Managed Sales Tax

Chargify provides the ability to automatically collect US, Canada and Australia sales tax using the Avalara AvaTax tax service. You define the areas that you are responsible for collecting taxes in, and Chargify does the rest automatically.

Configuring Avalara Sales Tax

Set your Tax Origin Address

To begin, make sure that you have a “Tax Origin Address” defined. This is your business’s address. Avalara needs a full adress on file to calculate the correct tax rates.

Tax Destination Address

When you use the Avalara managed sales tax service, you may only select the billing or shipping address to be used to calculate tax. Unlike custom taxes which can use billing or shipping, or vice versa, Avalara will only allow you to use one or the other.

You may not use the option to "Use Shipping Address if provided, otherwise use Billing Address" or "Use Billing Address if provided, otherwise use Shipping Address" with Avalara managed tax service.

Configure your Taxable Regions

Next you will define your Taxable Regions. These regions inform Chargify where your company wishes to calculate and report tax.

Enable Avalara Sales Tax

Finally, click the ‘Enable’ button in the Avalara Sales Tax section. Note that doing so will disable any existing custom taxes that you have.

Marking Products and Components as Taxable

Unless otherwise specified, all products and components are NOT eligible for taxes. Once a tax is defined, you will need to update your existing products and components so that they can be taxed. To do this, edit the product or component and check the ‘This product is subject to taxes’ checkbox.

You will also want to ensure that the “Require Shipping Address at signup?” checkbox is also checked for each product.

Note that Avalara needs a full address on file in order to calculate taxes.

Creating Taxable Subscriptions

In order for a subscription to be considered taxable, the subscription must have a valid shipping or billing address. The address information must be complete, and be formatted properly in order to correctly determine the tax locale of the charge.

Full Address Required for Taxable Subscriptions

When using Avalara, Chargify requires that you use complete addresses in order for your subscriber to be taxed appropriately. Partial addresses, such as country and zip code, are not acceptable as valid addresses in order to derive tax information from Avalara. The result of supplying partial addresses will be that your subscribers are not charged tax.

A complete address includes the following:

  • Address 1 (50 characters maximum)
  • Address 2 (optional, use when appropriate)
  • City
  • State (Required ISO format, see below)
  • Country (Required ISO format, see below)
  • Postal Code / Zip (11 characters maximum)

Required Country Format for Taxable Subscriptions

Chargify requires that you use the ISO Standard Country codes when designating the subscriber's taxable location.

Countries should be formatted as 2 characters. For more information, please see the following wikipedia article on ISO_3166-1.

Required State Format for Taxable Subscriptions

Chargify requires that you use the ISO Standard State codes when designating the subscriber's taxable location.
  • US States (2 characters): ISO_3166-2

  • States Outside the US (2-3 characters): To find the correct state codes outside of the US, please go to ISO_3166-1 and click on the link in the “ISO 3166-2 codes” column next to country you wish to populate.

Coupons and Taxes

When applied in conjunction, taxes are applied to the total cost of the subscription AFTER the coupon adjustment has been accounted for.

Tax History

You can view and export a history of all tax charges by clicking the ‘View Tax History’ button at the top of the Taxes page.

Here is a sample of what information the tax history page displays:

The following is displayed:

  • ID: ID of the transaction that the tax applies to.
  • Assessment Date: The date the tax was charged.
  • Collection Date: The date the tax was paid for (will be blank if the payment failed).
  • Subscription ID: ID of the Subscription.
  • Tax: The name of the tax applied.
  • Tax Rate: The rate of this tax.
  • Amount: The tax amount.
  • Jurisdiction: The jurisdiction of the tax.