> ## Documentation Index > Fetch the complete documentation index at: https://docs.arcuserp.com/llms.txt > Use this file to discover all available pages before exploring further. # Tax and AvaTax Operations > Tax settings control how Arcus validates addresses, calculates sales tax, handles exemptions, records marketplace facilitator tax, commits final transactions to AvaTax, and adjusts tax during returns or voids. **This guide is operational, not tax advice** Arcus can help enforce the workflow, but your tax rules, exemption policy, nexus setup, AvaTax company configuration, and filing responsibilities should be confirmed with your tax advisor or Avalara administrator. ## Open the Tax Settings 1. Open **Settings**. 2. Choose **Entity Settings**. 3. In the left navigation, open the **Tax** group. 4. Select **Tax Configuration** or **AvaTax**. Tax Configuration settings showing AvaTax connection status, company code, environment, and address validation test ## What Each Tax Page Does The Tax group has two settings pages. Use them together. * **Tax Configuration**: confirms connection health, company code, environment, and address validation behavior. * **AvaTax**: explains the document strategy, marketplace tax routing, last tax sync event, manual recovery tools, and recent AvaTax errors. **Connector setup lives in Integrations** Add or update AvaTax credentials from **Settings > Entity Settings > Integrations**. The Tax pages are for verification, monitoring, and controlled recovery. ## Address Validation and Jurisdictions Arcus uses the shipping address to determine the tax jurisdiction. The same address validation flow also supports shipping workflows, so clean address data matters before tax, rate shopping, labels, and fulfillment. * A complete ship-to address needs street, city, state, ZIP, and country. * Address validation can suggest corrected address details before a user saves or uses the address. * Commercial or residential classification can affect carrier charges and shipping rules. * If an order has no complete shipping address, tax calculation cannot finish. **Business locations matter too** AvaTax also needs the ship-from side of the transaction. Keep company locations and ship-from defaults current in Company Setup and Shipping and Fulfillment Setup. ## How Tax Moves Through an Order Tax is calculated while the order is still changing, then committed only when the sale reaches a final point. That keeps draft edits flexible while protecting filing records from duplicate commits. AvaTax settings showing connection status, document type strategy, and last AvaTax event * **Draft and pricing work**: Arcus previews tax so users can see totals before fulfillment or final invoice steps. * **Line, address, customer, shipping, and exemption changes**: open orders can recalculate tax when those values change. * **Final commit**: direct-sale orders are committed to AvaTax when the order reaches the configured finalization path. * **Retry safety**: once an order has a committed AvaTax transaction, repeat commit attempts return the existing result instead of filing a duplicate. * **Cancellations and voids**: voiding a committed order can void the AvaTax transaction when the workflow requires it. * **Returns**: post-commit returns can create a return adjustment so tax liability is reduced against the original sale. ## Document Type Strategy AvaTax shows this in more technical language because it matters for filing: draft calculations use an uncommitted sales order style preview, while final sales use a committed invoice style transaction. In daily operations, the important rule is simple: edits recalculate before finalization, and finalization commits once. **Do not force re-sync as a normal workflow** The force re-sync tool is an admin recovery action. Use it only when a known order should already be committed and you have confirmed the order number, connector status, and accounting impact. ## Direct Sales vs Marketplace Sales Arcus treats direct sales and marketplace orders differently so sales tax is not filed twice. Marketplace facilitator rules determine whether Arcus commits to AvaTax or records the tax as passthrough liability. AvaTax marketplace tax handling table with platform rules and GL account routing * **Direct sales**: phone, counter, email, B2B portal, and other non-marketplace sales are committed to AvaTax when finalized. * **Amazon and eBay**: treated as marketplace facilitator passthrough. The marketplace collects and remits sales tax. * **Shopify**: can be mixed. Shopify-collected lines stay passthrough, while merchant-collected lines can be committed by Arcus. * **Unknown marketplace sources**: should be reviewed before relying on automated filing behavior. **Accounting routing matters** Merchant-collected tax belongs in the normal sales tax payable account. Marketplace-collected tax is tracked separately as facilitator passthrough so your team can reconcile what Arcus collected from what the marketplace handled. ## Tax Exempt Customers Tax exemption is controlled from the customer account and can also be reviewed on the order. Arcus requires a real exemption basis before an account or order can be marked tax exempt. * Set a **Tax Exemption Code** on the customer account before enabling the tax exempt toggle. * **Resale** and **Direct Pay** exemptions require a tax number. * Account tax changes can recalculate open quotes, sales orders, and invoices that still allow edits. * Already finalized or committed documents should be corrected through the proper void, return, or reissue workflow. * Upload and retain exemption certificates according to your internal policy. **Verify important open orders after changing exemption setup** Arcus recalculates eligible open work when tax identity changes, but users should still review any high-value quote, order, or invoice before sending it to a customer. ## Product and Line Tax Behavior Product setup affects how lines are sent for tax calculation. Good product data prevents wrong tax categories and reduces manual correction later. * **Product Tax Code** supplies the AvaTax category used for jurisdiction-specific taxability. * **Charge Tax** is the product-level taxable intent that snapshots onto new order lines. It does not replace the order tax calculation, product tax code, customer exemption workflow, or final tax review. * Kit component lines are not sent as separate taxable sales lines. The sellable kit parent carries the taxable sale amount. * Freight orders can include a freight and shipping tax line when the order has a shipping total. * Manual line edits should be reviewed before finalization because tax is recalculated from the line values that remain on the order. **Do not rely on Charge Tax alone for non-taxable sales** If a sale must be tax exempt or non-taxable, confirm the customer exemption, product tax code, shipping address, and final tax result before the document is finalized. ## Common Blocks and What to Check
Symptom What to check
Tax is zero on a direct sale AvaTax connector status, company code, environment, shipping address, product tax code, account exemption, and final tax result.
Address validation fails Street, city, state, ZIP, country, and whether the address has a suggested correction.
Tax exempt toggle is disabled Set a Tax Exemption Code first. Add a tax number for Resale or Direct Pay exemptions.
Marketplace tax looks wrong Confirm the order source and whether the marketplace or merchant collected the tax.
Commit tool is disabled Confirm you have settings edit access, AvaTax is configured, and an order number is entered.
Return tax did not adjust Confirm the original order had a committed tax transaction before the return was processed.
## Use Recent Errors for Recovery The AvaTax page includes a recent errors section. Use it to find failed commits, failed voids, or return adjustment problems without searching every order manually. AvaTax settings showing force re-sync order field and recent AvaTax errors area * Start with the most recent error and open the related order or return. * Confirm the order source before committing anything to AvaTax. * Confirm the address and customer exemption data before retrying. * If an order was already committed, expect Arcus to return the existing transaction instead of creating a duplicate. * After recovery, review the order activity and accounting impact. ## Recommended Admin Checklist 1. Connect AvaTax in Integrations for the correct environment. 2. Confirm Tax Configuration shows the expected company code and environment. 3. Test one known safe address before relying on live order tax. 4. Review Company Setup and locations so ship-from addresses are correct. 5. Review product tax codes for top-selling products, kits, services, and freight-sensitive items. 6. Set exemption codes and tax numbers on customer accounts before taking exempt orders. 7. Run a direct-sale test order and confirm draft tax, final tax, invoice totals, and accounting posting. 8. Run a marketplace test import and confirm passthrough or merchant-collected behavior. 9. Run a return test for a committed order and confirm the tax adjustment appears. ## Related Articles Understand the admin surfaces, settings groups, and workflow impact areas. Configure business profile, environment, branding, locations, and the workflow impact of company defaults. Connect Stripe, marketplaces, shipping, email, and other services. Build a sales order, add customers, set addresses, and add products. Use pricing rules, quantities, adjustments, and tax-aware line editing. Find, create, post, send, pay, correct, and void customer invoices.