Creating Tax Groups with Avalara

You can add multiple products at once to a tax group right from your tax settings.

You can also assign an individual product to a tax group from the Products tab. This comes in handy when adding new products that need to be assigned to a group.

Some locations require you to collect and remit tax for digital products, while in other locations the sale of digital products is tax-free. 

Avalara recognizes which of your products are digital and gives it a default code for digital products. 

If the digital products you sell are taxed at a different rate, you can click the More Actions icon  next to Digital products, select Edit group and select a different code. You can also create custom tax groups for different digital products.

Avalara manages your tax groups in all locations where you collect tax. Let's look at an example. 

A merchant sells car seats in 3 tax locations. In one location, the car seats are taxed at the default rate. In another, they're taxed at a lower rate, and in the third, car seats are tax-free. 

After the merchant creates a tax group and adds all their car seats to that group, Avalara automatically knows the correct tax rate to apply when customers from any of those three locations buy one of their car seats.