--- title: Avalara description: Automatic sales tax, VAT, and GST on every invoice, computed by AvaTax with your manual rates as the fallback. domain: integration status: shipped visibility: public last_verified: 2026-08-01 order: 36 --- Avalara AvaTax computes tax for invoices automatically, across US sales tax jurisdictions, VAT, and GST. Once connected, it replaces the manual rate lookup for invoice generation: yRecurring sends the invoice lines and addresses, AvaTax returns the computed tax with its full jurisdiction breakdown, and everything lands on the invoice exactly like manually computed tax does, traces and all. ## Before you connect You need an AvaTax account with an account ID and a license key, and optionally the company code your transactions file under. Leave the company code blank and yRecurring looks up your account's default company and pins its code when you connect; if you type a code, it is checked against your account so a typo fails right away instead of at the first filing. If you use the AvaTax sandbox, choose "Connect to the sandbox instead" under the Connect button; sandbox connections talk to the sandbox host. While your account is still in its trial test phase every connection is a sandbox connection automatically, and the link does not appear. Avalara sandbox accounts are separate accounts with their own account ID and license key. Production credentials do not work on the sandbox, and sandbox credentials do not work in a live connection. If a connect attempt is rejected, check that the credentials match the mode you picked; the message tells you which one you are connecting. ## Connecting Go to Settings, then Integrations, and select Connect on the Avalara card. Enter the account ID, license key, and company code. yRecurring verifies the credentials with AvaTax before saving; the key is stored encrypted. The connection is named after the AvaTax account you connected; rename it any time with the pencil next to the name. ## Which entities calculate tax here One tax connection serves each billing entity. Your first Avalara connection becomes the default: every billing entity calculates tax through it unless you say otherwise, so a single-company setup is done as soon as it connects. If you file through more than one AvaTax account, add a second connection and open its page. Under "Which entities calculate tax here", tick the billing entities that should use it; everything you leave unticked stays with the default. The same section tells you which connection is the default and lets you move that to another one. A connection that is neither the default nor ticked for any entity is not used at all, and its page says so. ## How invoices are taxed - When an invoice is generated, yRecurring records an uncommitted transaction in AvaTax under the invoice's ID and uses the returned tax. The invoice's tax breakdown lists each jurisdiction AvaTax reported, and each line carries the tax AvaTax computed for that line, so mixed catalogs (one taxable product, one exempt) stay accurate line by line. - When the invoice becomes final, the AvaTax transaction is committed so Avalara's records match yours for filing. Voiding the invoice voids the transaction. A zero-tax result (no nexus, exempt tax codes) is committed too: exempt sales belong in your filing reports. - Issuing a credit note against an AvaTax-taxed invoice records a committed return in AvaTax with exactly the tax the note reverses, so your filings net the credit. Voiding the note voids the return. - Previews and checkout quotes use AvaTax estimates that are never recorded, so abandoning a checkout leaves nothing behind in Avalara. The checkout quote sends the same lines and address the first invoice will, so the figures match. Identical estimates are reused for about a minute, so a buyer toggling options does not generate one AvaTax call per click. - The customer's ID keys each AvaTax document, and a customer's validated VAT ID is sent along so business customers get business treatment in AvaTax's own VAT logic. Product tax codes matter for accuracy: set the tax code on your products (for example a software-as-a-service code) and it is sent with each line, so AvaTax applies the right taxability rules. ## If AvaTax is unreachable Billing never waits on a tax provider. You choose what happens when AvaTax cannot be reached, per connection: - **Fall back to your manual rates** (the default). The invoice is taxed from your own [tax rates](/guide/taxes/tax-rates) and billing continues. - **Issue at zero tax and flag.** The invoice goes out untaxed and is flagged for review. - **Block.** Invoice generation fails until the provider is back. Strictest, for businesses that must never issue with the wrong tax. ## What still applies - Tax-exempt customers are never sent to AvaTax; they stay untaxed. - Tax-inclusive customers keep their pricing: AvaTax backs the tax out of the amounts instead of adding it on top. - Credit notes reverse the tax they inherit from the source invoice, and [tax reports](/guide/reports) include provider-computed tax like any other.