Getting Started

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Invoices

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Order Management

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Taxes

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Configuring Gateways

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Developers

Third Party Integrations

AvaTax for Sales 

AvaTax for Sales calculates sales tax efficiently and facilitates sales tax compliance requirements delivered on-demand. Integrate your Avalara AvaTax for Sales account with Chargebee and have sales tax applied on your invoices automatically.

Prerequisites 

Chargebee 

1. Organization Address

Avalara requires your business' address to calculate tax for an invoice. The Organization Address you provide in your Chargebee site will be used by Avalara for this purpose, and will also be stored as the Origin Address in Avalara. In order to use the Avalara integration, the Organization Address in Chargebee should have at least the Country, State, and Postal Code filled.

The Organization Address can be configured for your site under Settings > Configure Chargebee > Business Profile.

2. Address for Tax Determination

Chargebee will use your customer's shipping address to calculate tax. If the shipping address is unavailable, then the billing address would be used for the same.

Note

If you're using Hosted Pages, ensure that:

  • The Shipping/Billing Address field has been enabled. This can be done under Settings > Configure Chargebee > Checkout & Portal > Fields.
  • The Zip Code, Country, and State fields are made mandatory in the hosted pages.

3. Plan and Addon Details

Given that the taxes are subject to each type of charges that are added in an invoice, it is required of you to add tax codes for your Plans and Addons for Avalara to calculate tax accordingly.

Avalara 

1. Nexus Jurisdictions

When your business has 'nexus' in a tax jurisdiction, it has a physical presence and connection in that jurisdiction and is thereby obligated to collect and remit taxes to the State. Configure nexus jurisdictions in your Avalara AvaTax account to let Avalara know where to tax. Country, regional, and local jurisdictions can be added for this purpose. While configuring nexus jurisdictions, you will be prompted to add the 'begin' and 'end' dates. Avalara requires these dates to determine when to process transactions.

Read more about nexus jurisdictions.

Configuration 

To have Avalara apply taxes on your Chargebee Invoices automatically involves 4 major steps.

Step1 : Connecting Avalara account with your Chargebee site 

To integrate Avalara with your Chargebee site,

  1. Navigate to Settings > Third-Party Integrations > Tax Management > Avalara.

  2. In the Avalara configuration page, if you have an Avalara account, click Get Started or if you don't have one already, click Sign up to create your Avalara account and continue.

  3. Choose the AvaTax Type to be AvaTax for Sales.

  4. Enter your Avalara credentials - Account number, Licence key and Company Code, and click Proceed.

  5. Enter/confirm your organization address, without which you will not be able to proceed. Chargebee will populate the address that is specified in your settings, you can change this if you'd like to or click Proceed.

  6. Under Shipping Address Validation you can,

    • choose to turn on [Avalara's address validation](https://www.chargebee.com/docs/avatax-for-sales.html#avalara-address-validation) support to validate your customers' shipping addresses.
    • allow customers to sign-up with partially valid addresses, and Charegbee will mark their shipping addresses as partially valid.

    Once you are done, click Proceed.

  7. Lastly under Configure Sync Rules you can,

    • turn the toggle on to allow Chargebee to post invoices and credit notes to Avalara.

    • choose how you'd want the invoices and credit notes posted to Avalara.You can choose to

      • commit all invoices and credit notes - all your invoices and credit notes will be sent to Avalara as Committed.

      • commit only paid invoices and adjusted/refunded credit notes - Only paid invoices and adjusted/refunded credit notes will be sent to Avalara as 'Committed'. Remaining invoices will be sent as Uncommitted.

      • don't commit: All your invoices and credit notes will be sent to Avalara as Uncommitted.

Learn more  about how this works in Avalara.

Once you are done with the settings, click Proceed.

Note
  • Ensure that the Invoice/Credit Note numbers of the documents in Chargebee that are yet to be committed, are different from the numbers used for documents that have already been committed in Avalara.
  • You can make changes to the integration preferences at any point of time by going to Settings > Third-Party Integrations > Tax Management > Avalara > Manage and clicking on Manage Preferences in the Avalara integration page.

Step 2 : Validating Addresses for Existing Customers 

For customers who have signed up before enabling Avalara, Chargebee will cancel their subscriptions during renewal if tax cannot be determined. To identify subscriptions that are at a risk of getting cancelled, Chargebee provides a validation tool. The subscriptions which are at the verge of cancelation can be determined using this tool and you can view the Invalid address details.

Under Validate Existing Addresses, choose your respective taxable regions for which you want to run validation, and click Run Check.

During the first ever check that is run after the integration is configured, the tool will validate all the existing Subscriptions' taxable address. If the shipping address is present, then it will be used for the validation. If the shipping address is not present, then the billing address will be used instead. Subsequent checks for address validation will check only the addresses that are added after prior validation and not all the addresses. You can look for any possible address errors and have them fixed.

In order to validate the address, Chargebee will make a tax estimate call to check if the address is taxable. If the taxable address happens to be the Shipping Address and if Avalara's Shipping Address Validation is enabled, an additional check will be made to validate the complete address.

Step 3 : Configuring Tax Codes for your Plans and Addons 

Avalara uses the tax code to determine the tax rate for each product. Apart from this, taxable, non-taxable and partially taxable products will also be automatically differentiated using tax codes. More on this here.

As soon as Avalara is configured for your site, the Avalara Tax Code field will be available for Plans and Addons. Add the corresponding tax codes here using this Avalara tool.

For taxable products, if the Avalara Tax Code field is not filled in Chargebee, the default tax code will be used by Avalara for that product.

For non-taxable products, the default tax code (NT) will automatically be added by Chargebee and hence the Avalara Tax Code field will not be shown.

As an alternative to configuring tax codes in Chargebee, you could create items in Avalara with the item ID matching the product (Plan/Addon) ID in Chargebee. While creating an item in Avalara, the appropriate tax code should also be provided. If you configure the tax code in both Avalara and in Chargebee, the tax code in Avalara will override the one provided in Chargebee. However, we do not recommend configuring the tax code in Avalara as this method might be error prone.

Note
  • It is recommended that you specify tax codes for your plans and addons for EU region. Avalara identifies digital and physical goods only using these tax codes, based on which different taxes and exemptions are applied.

Step 4 : Configuring Customer Tax Exemption 

If you'd like a particular customer to be exempted from tax, you could do so while creating the customer in Chargebee by:

  1. Enabling the option This customer is exempted from tax payment.
  2. Specifying the exemption reason using Avalara Entity Type or the Exemption Number field. If you don't provide either, then Chargebee will default the Avalara Entity Code to "Other or custom".
Note
  • Tax exemption rules vary per US State and Territory/ Canadian Province.
  • A customer flagged as exempt from taxes (based on the Entity Code/Exemption Number provided) may be taxed in a state/province, but may not be taxed in another state.
  • If Avalara returns taxes for a state/province, then Chargebee will apply the taxes in the invoice in this case, even though the customer is marked as exempt.

Shown below is the details page of a customer with the Avalara tax fields:

Step 5 : Enabling Avalara as your Mode of Tax calculation 

This is the final yet most important step in the integration. Unless you execute this step, Avalara will not be used for automatic tax calculation in Chargebee.

Once you are done with all the above mentioned steps, go to Settings > Configure Chargebee > Taxes. Go to the respective taxable regions and click Switch from the Avalara banner, to choose Avalara as your preferred mode of tax calculation.

Enabling Avalara as your Mode of Tax Calculation for EU region :
While you are enabling Avalara as your preferred mode of tax calculation for EU region, you will be prompted that the Tax Registration Number specified will be displayed on your customers' Invoices.

If you have registered for VAT MOSS, you can enter your registration details and click Proceed. You can even add tax registration numbers for specific countries if required.

If you haven't registered for VAT MOSS, you will be prompted to add tax registration numbers manually, for countries where you have registered for VAT.

Avalara Address Validation 

You can use Avalara's Shipping Address Validation (for example Street Address) for a more accurate tax calculation. This is especially useful if your business involves delivering physical goods. A valid street address would mean lesser goods returning to you. The Shipping Address will be validated for every "Add/Update Shipping Address" operation.
When this option is enabled, the customer's shipping address is checked, if the address is invalid, an error is generated. The customer will then have to edit the address before completing the signup process.

Allow Customer to sign-up with/update Partially Valid Address

If the address is incomplete but Avalara is still able to return the tax rate, then this address is considered as a partially valid address.

The "Allow Customer to sign-up with/update Partially Valid Address" option has been provided to ensure that your signups are not affected due to invalid street addresses. If this option is enabled, Chargebee will allow partially valid addresses during checkout. These will be marked as ‘partially valid' in your Chargebee site. You can then filter the addresses from the web interface, and contact the customers to receive the correct address details.

Note
  1. The address validation check for existing customers has to be done before going live with Avalara.
  2. Once an address is validated and its validation status has been set, the address will be ignored during subsequent checks.
  3. If you're collecting the Billing Address from your customer, the billing address will be marked as partially valid/invalid.
  4. The addresses for sign ups that occur after validation and before enabling tax might get through without validation/might surpass the validation check.

Validation Status 

The possible address validation statuses are:

  • Not Validated: No validation check has been done. As default, all addresses will be marked as not validated.

  • Valid: Avalara address validation is successful.

  • Partially Valid: Address validation was not successful but essential fields for tax calculation are present. The error message Avalara address validation has failed will be displayed.

    Valid Address Partially Valid Address
    340 S, Lemon Ave #1537,
    Walnut, 91789
    California, United States
    340 S Avenue #1537,
    Walnut, 91789
    California, United States
  • Invalid: Address validation was not successful and tax could not be calculated. The error message Tax cannot be computed for this address will be displayed.

    Valid Address Invalid Address
    340 S, Lemon Ave #1537,
    Walnut, 91789
    California, United States
    340 S Avenue #1537,
    Walnut, 08999
    California, United States

Automatic Retries for Renewals and Activations 

When Avalara Credentials are invalid 

Chargebee will notify you via email if the Avalara credentials are invalid, and will prevent sign ups.

Chargebee will set off retry attempts for renewals and activation as follows:

Retry

Time

1

20 hours after the initial failure

2

40 hours after the previous retry

3

60 hours after the previous retry

When Avalara's server is down 

If Avalara's server goes down, Chargebee will prevent sign ups, and will set off retry attempts for renewals and activations as follows:

Retry

Time

1

30 minutes after the initial failure

2

60 minutes after the previous retry

3

120 minutes after the previous retry

You can check Avalara's status here 

Handling Refunds Made Through Chargebee 

When a payment is refunded to the customer, Chargebee will create a Credit Note for the refunded amount. This Credit Note will then be pushed to Avalara and be displayed as a "Returned Amount".

Handling Deleted/Voided Invoices 

When an invoice is voided/deleted in Chargebee, it's status will be marked accordingly in Avalara. However, going forward (from October 2019), when an invoice is voided/deleted in Chargebee, it will be voided and never deleted in Avalara.

Things to check before you start using the Avalara integration 

Here's a checklist you could use to integrate Avalara with your Chargebee site:

  1. Ensure that your site's Organization address is filled out accurately in both Avalara and Chargebee.
  2. If you're using Hosted Pages, ensure that the shipping/billing address field has been enabled and the Zip Code, Country, and State fields are made mandatory.
  3. Configure Nexus jurisdictions in your Avalara AvaTax account.
  4. If you're an API user, ensure that the address is passed in the estimate API only if you want tax to be calculated. If the address is present, you will be charged for the tax estimate lookup.
  5. Test the integration in your sandbox site.
  6. Enable Avalara for your Chargebee live site.

Limitations 

This integration has the following limitations:

  • This integration does not support inclusive pricing.

  • The hosted pages theme "Rhapsody" does not support Avalara integration

  • When Avalara integration has been enabled (or disabled), the next billing amount is not recalculated for the existing subscriptions until the subscription is renewed or updated. This is to avoid the sudden surge of API calls that would be made to Avalara since Avalara charges are based on the number of API calls.

  • Enabling Invoice amount rounding in Chargebee will result in a total amount mismatch between Avalara and Chargebee.

If you ever want to unlink the Avalara integration from your Chargebee account,

  1. Go to Settings > Configure Chargebee > Taxes and switch from Avalara to your preferred mode of tax calculation from all the regions where you have chosen Avalara by clicking Change.
  2. Next, go to Settings > Third-Party Integrations > Tax Management > Avalara and click Unlink integration.
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