What’s New?
We are introducing an integration with Avalara, a leading tax compliance solution, to streamline tax calculations, reporting, and filing within BuildOps. This enhancement automates tax compliance by:
Accurately calculating taxes based on up-to-date rules across 12,000+ U.S. jurisdictions.
Reducing manual efforts in maintaining tax rates, rules, and exemption configurations.
Simplifying tax reporting and filing processes.
This integration ensures businesses can focus on operations while staying fully compliant with complex tax laws.
Current Challenges
Managing taxes in the United States can be incredibly complex, with over 12,000 jurisdictions each having their own rules, rates, and exemptions that change frequently. Keeping up with this complexity requires not only detailed tax classifications and jurisdictional mappings but also constant updates and expert oversight.
To address this challenge, we have integrated with Avalara, a trusted external tax provider. Avalara simplifies tax compliance by ensuring accurate calculations, maintaining up-to-date rules and rates, and automating tax reporting and filing. This integration helps businesses save time, reduce administrative effort, and stay compliant with local, state, national, and international tax laws.
How We’re Solving It
Avalara Onboarding
Before you begin
AvaTax company profile includes the key information about your business that determines how tax is calculated.
Where you collect and pay tax
Products and services you sell and where you sell them
Customers you exempt from tax, if any
The information Avalara needs varies depending on the product you're setting up. To help make sure that your profile is complete, your implementation team and Avalara Knowledge Center information will guide you through the first three steps of the onboarding experience.
To effectively utilize the Avalara integration within BuildOps, it's essential to configure your Avalara environment in collaboration with your assigned Avalara representative. This setup process typically includes:
Account Setup - Add your company information: Establish your Avalara account, ensuring all necessary business information is accurately entered. Begin by entering your address and tax ID numbers.
Nexus & Tax Jurisdictions Configuration:
Tell us where you collect and pay tax. Identify and configure the jurisdictions where your business has tax obligations. This involves specifying the states, local jurisdictions, and countries where you're registered to collect and pay tax.
Verify your jurisdictions and activate your company. Double-check that we know everywhere you collect and pay tax. Confirm the tax types, effective date for each jurisdiction, and tax ID numbers.
Add other company locations for location-based filing. Add other company locations if you need to file returns based on location reporting requirements.
Add a marketplace to your company profile. If you don't use an extractor and you sell through a marketplace such as Amazon, Etsy, or Ebay, learn how to add it to your company profile.
Check the list of places where your company is registered to collect and pay tax. Add effective and expiration dates, change tax type and place of supply settings, and add tax IDs.
Gather the registration information for each jurisdiction. You can find most of this information on your tax returns and business registration documents.
Effective date for when your registration begins for each jurisdiction.
Tax type you're registered to collect and pay.
Whether your company is established in a country and if it is the importer of record for a country.
Company tax ID numbers for each country.
Verifying Jurisdictions Within Avalara
On the Where You Collect Tax page, during the Avalara guided onboarding experience, double-check where your company is registered to collect and pay tax.
To see locations within the U.S., select Sales and Use Tax, select Details, and then select the edit icon to review the States and tax types and effective date for each jurisdiction. By default, the effective date for a jurisdiction is set to one year prior. If you registered with a jurisdiction, but aren't allowed to collect tax yet, change the effective date to the future date when your registration begins.
To see locations outside the U.S., select VAT / GST, select Details, and then select the edit icon to review the tax type and effective date for each jurisdiction and to add your registration number.
If everything looks correct, Select Done with Tax Jurisdictions.
Select Activate Company.
Product and Service Taxability: Define the taxability of your products and services by determining appropriate tax codes Tax Codes Search | Avalara that will be further assigned to items in BuildOps. This ensures that Avalara applies the correct tax rates based on the nature of each item.
Exemption Certificate Management: Set up processes for managing tax-exempt sales, including the collection and storage of exemption certificates. This is crucial for compliance and audit purposes. Please keep in mind BuildOps does not currently support exemption certificates.
Integration with BuildOps
Connect your Avalara account with BuildOps to enable seamless tax calculations within your operations. This integration allows for real-time tax determination during document processing.
On the Integrations → Avalara, toggle the Avalara Integration setting to specify the connection settings
Specify the Account Number, License Key, Avalara Environment URL, Company Code provided to you by Avalara. You will likely have two environments - a sandbox one for the testing and training purposes as well as a Production one once you are ready to go live with Avalara integration. We strongly recommend that you conduct thorough testing to ensure that tax calculations are accurate and align with your business requirements. This step helps identify and resolve any issues before going live.
In addition to this, you can specify your company’s Entity Use Code. Choose the one that is applicable to your company from the list Avalara Knowledge Center. We will be sending your use code together with the AP tax transactions as a reason for tax exemption if any.
Default Reporting Location Code - this field will allow you to specify the alphanumeric value of your reporting location. Reporting location codes are used in AvaTax to set the sale location code (Outlet ID) for reporting the documents to the tax authority. Avalara Managed Returns uses this to group documents together by reporting locations for tax authorities that require location-based reporting. See more details here: Avalara Developer
Use Avalara for Calculation Purposes Only - enable this setting if you would like to use Avalara in BuildOps for the calculation purposes only and to not create Avalara transactions from BuildOps. This setting makes sense if you have Avalara integration in your accounting system and would create final tax transactions from that accounting system rather than from BuildOps. By default this setting is disabled, meaning BuildOps will not only calculate AP and AR taxes with Avalara but also create and commit tax transactions in Avalara.
Click the Submit button in the top right corner of the screen once all the attributes are correctly specified.
Agree with the changes made in the Update Avalara credentials settings dialogue.
Wait till the success message appears. If any connection problems occur, the system will show you a corresponding error message.
Work Taxability Types
A new Work Taxability Configuration is introduced in the Accounting Settings → Taxes → Settings where users can define custom work taxability types (e.g., Capital Expenditure, Real Property, Tangible Property).
Default Work Taxability at Job & Project Levels
Assign AR and AP work taxability at the job and project level, ensuring the default work taxability arrives into the document lines associated with this job / project:
AR work taxability will arrive into customer invoices associated with this job / project.
AP work taxability will arrive into purchase orders, receipts, and bills associated with this job / project.
Product and Service Taxability: Provider Tax Code Assignment in Item List
Define the taxability of your products and services by assigning appropriate tax codes to them in the Item List. This ensures that Avalara applies the correct tax rates based on the nature of each item.
On the Item List, for each item assign the corresponding Default Provider Tax Code value. This attribute completely replaces the old Taxable checkbox in BuildOps - from now on the taxability of each item will be identified by the Provider Tax Code value only. The value assigned to each item in the Item List will be defaulted into the document lines, and can be overridden at each document line level if necessary. We can help with mass updating the item list based on a file provided by you with the Item Names and Provider Tax Codes associated with them.
In addition to this, if you are using the Work Taxability Types functionality, you can now map specific provider tax codes to a given work taxability type when Work-specific Provider Tax Codes toggle is enabled. You can start typing the exact code if you know it or the item name / type in the Provider Tax Code search box to identify the best suitable tax code. You can also use Avalara Tax Codes Search for convenience: https://taxcode.avatax.avalara.com/
Work Taxability Type Field in Financial Documents
Work Taxability Type field is added to purchase order lines, receipt lines, bill lines, and invoice lines.
The field is defaulted based on job/project-level AP Work Taxability (for purchase orders, receipts, bills) and job/project-level AR Work Taxability (for invoices) but allows manual overrides when necessary.
Automated Tax Code Defaulting
If a work taxability is assigned to a document line, the system automatically selects the appropriate tax code if a specific tax code is assigned to the chosen item for the chosen work taxability type.
If no work-specific provider tax code is found for this item, then the Default Provider Tax Code will arrive into the line.
Avalara Tax Calculation on Purchase Orders, Receipts, Bills
In order to calculate taxes on the purchase orders, receipts, and bills we send the following data to Avalara (AvaTax API):
Company Information: Details about your company, including the company code specified in the Avalara Integration settings.
Transaction Type: Specifies the type of transaction, such as sales, purchase, or return.
We identify it automatically based on the document entered.
For the purchase orders, no records are generated in Avalara. They are treated as Sales Order (for the sales taxable amounts) or Purchase Order (for the use taxable amounts) transaction type and are used for tax calculation purposes only.
Sales Taxable Receipts & Bills:
When Three-Way Matching is disabled, the sales taxable receipt lines are treated as Sales Invoice transaction type. No transactions will be produced in Avalara for the vendor payable sales taxes.
When Three-Way Matching is enabled, the sales taxable receipt lines are treated as Sales Order transaction type and are used for tax calculation purposes only - no records are generated in Avalara. The sales taxable bill lines are treated as Sales Invoice transaction type. No transactions will be produced in Avalara for the vendor payable sales taxes.
Use Taxable Receipts & Bills:
When Three-Way Matching is disabled, the use taxable receipt lines are treated as Purchase Invoice transaction type. A corresponding transaction will be produced in the list of Avalara Consumer Use Transactions.
When Three-Way Matching is enabled, the use taxable receipt lines are treated as Purchase Invoice transaction type and are used for tax calculation purposes only - no records are generated in Avalara. The use taxable bill lines are treated as Purchase Invoice transaction type. A corresponding transaction will be produced in the list of Avalara Consumer Use Transactions.
Document Date: The date of the transaction, which affects the applicable tax rules.
For the Purchase Orders, we use the Date of Purchase field.
For the Receipts and Bills, we use Issued By field.
Customer Code: A unique identifier for the vendor involved in the transaction.
We send the BuildOps name of the vendor associated with the purchase order / receipt / bill.
Addresses:
Origin Address (Ship From): The location from which goods are shipped or services are provided.
For the purchase orders, receipts, and bills we will now have the Ship From Address exposed
If the avalara-ship-from-defaults feature flag is enabled:
Then we will default the Ship From address to the Shipping Address associated with the Department, if any is specified in the document header. Each header department change must trigger Ship From address re-defaulting.
If the department has no address assigned, then we will default the Ship to Address value to the Business Address specified in the Company Settings.
In future, we will replace this logic with defaulting from different vendor locations.
Ship From Address can be manually edited on purchase orders and bills.
If the avalara-ship-from-defaults feature flag is not enabled:
We default the Ship From Address to the document Bill To Address.
Ship From Address can be manually edited on purchase orders and bills.
Please keep in mind that the correct Ship From address is crucial for the correct sales tax transactions:
Origin-Based States: In these states, sales tax is typically calculated based on the seller's location - the "Ship From" address. Therefore, if the "Ship From" address is in an origin-based state, the tax is calculated based on that address.
Destination-Based States: In these states, sales tax is determined by the buyer's location - the "Ship To" address. Thus, if the "Ship From" address is in a destination-based state, the tax is calculated based on the "Ship To" address.
However, it's important to note that these sourcing rules primarily apply to intrastate transactions (sales within the same state). For interstate transactions (sales between different states), most states require sales tax to be calculated based on the destination, regardless of whether the state is origin-based or destination-based.
Additionally, some states have mixed sourcing rules. For example, California applies origin-based sourcing for state, county, and city taxes, but destination-based sourcing for district taxes.
Destination Address (Ship To): The location to which goods are delivered or services are rendered.
For the purchase orders, receipts, and bills we send the document Ship To Address value to Avalara.
If the Ship To Address is missing, Bill To Address is used for the tax calculation purposes.
Line Items: Details of each item in the transaction, including:
Item Code: A unique identifier for the product or service.
We currently send the BuildOps unique identifier of the item (Item Name) to Avalara.
Description: A brief description of the item.
We send the document (purchase order / receipt / bill) line Description to Avalara.
Quantity: The number of units sold or purchased.
We send the document (purchase order / receipt / bill) line Quantity to Avalara.
Amount: The monetary value of the item.
We send the document (purchase order / receipt / bill) line Amount to Avalara.
Tax Code: A code representing the taxability of the item.
We send the document (purchase order / receipt / bill) line Provider Tax Code value to Avalara.
Sample Bill with Avalara Calculated Sales Taxes
The sample calculation below is done with the Three-Way Matching enabled configuration.
Scenario: I have created a bill in BuildOps with the following attributes:
Bill To Address - defaulted from the vendor’s Billing Address (can be manually overridden)
4650 Edison Ave, Chino, CA, 91710
Ship From Address - defaulted from the Bill Department Address
456 Elm St, Pottstown, PA, 19464
Ship To Address - driven from the shipping destination, in this example - from the Vendor Location
1555 N Chrisman Rd, Tracy, CA, 95304
Issued By date - 01/06/2025
Bill Items:
Line #1
Item Name - Pressure Treated Wooden Plank
Provider Tax Code - PA3000400 - Lumber - solid wood product
If the bill line has a job / project assigned, and if this job / project has AP Work Taxability specified,
Then the work taxability-specific Provider Tax Code will arrive into the line from the item, if any.
Else, the Default Provider Tax Code of this item will arrive.
Work Taxability and Provider Tax Code can always be overridden.
Description - Pressure Treated Wooden Plank
Use Taxable = False
Qty Billed = 10
Amount = $1,426.70
Line #2:
Item Name - Door Frames
Provider Tax Code - PH101300 - Doors, garage doors, and windows labeled impact-resistant or has impact-resistant rating
Description - Door Frames
Use Taxable = False
Qty Billed = 10
Amount = $8000.00
Avalara automatically calculates sales Tax Amount for these lines.
The taxes are calculated by Avalara and displayed on the Tax Details tab:
If you wish to override the calculated tax with the vendor charged sales tax, you can do so with the help of Tax Amount Overridden box. Once you specify the tax amount overridden value in a sales taxable vendor bill, the Avalara calculated tax amount will be replaced with the vendor charged one. The total tax amount overridden will be split between the lines proportionally.
Sample Bill with Avalara Calculated Use Taxes
Scenario: I have created a bill in BuildOps with the following attributes:
Bill To Address - defaulted from the vendor’s Billing Address (can be manually overridden)
4650 Edison Ave, Chino, CA, 91710
Ship From Address - defaulted from the Bill Department Address
456 Elm St, Pottstown, PA, 19464
Ship To Address - driven from the shipping destination, in this example - a manually entered address
1555 Berger Dr, San Jose, CA, 95112
Issued By date - 01/06/2025
Bill Items:
Line #1:
Item Name - Tempered Glass Panel
Description - Custom-sized tempered glass panels designed for high-rise buildings
Provider Tax Code - SC150200 - Construction services relating to real property (existing construction, commercial)
Use Taxable = True
Qty Billed = 10
Amount = $15,000.00
Line #2:
Item Name - Insulating Glass Spacer
Description - INSULATION • ALUMINUM • 78123-IGS
Provider Tax Code - none
Use Taxable = True
Qty Billed = 25
Amount = $450.00
Avalara automatically calculates Use Tax Amount for the lines based on the Use Taxable checkbox.
If you wish to address a partial use tax scenario, when, for example, the vendor charged you a portion of tax corresponding to the state tax jurisdiction, but not the city tax portion, you can specify it in the Tax Amount Overridden box. Once you specify the tax amount overridden value in a use taxable vendor bill, the Avalara calculated use tax amount will be recalculated as a difference that is left to pay to the jurisdictions, after paying the vendor charged tax. The total tax amount overridden will be split between the lines proportionally.
Avalara use tax amounts will be displayed on the Tax Details tab accordingly:
While the bill is in Pending status, the corresponding transaction in Avalara can be revealed through the Transactions → Consumer Use Transactions. Each bill line will produce its own transaction:
The status of the transaction in Avalara is Uncommitted.
Once you post the bill, the corresponding tax transactions will have their status Committed which means a finalized use tax transaction used for filing taxes in Avalara. Only Committed use tax transactions are included on tax returns. Transactions become locked and can’t be edited once they’ve been reported on a filed return.
If you void the bill in BuildOps, the related tax transaction in Avalara will have the Voided status:
Use Tax Export to Intacct
Bill Lines Retrieval on the Accumulated Use Taxes tab of the Use Taxes screen
The bill lines will appear on this screen if all the conditions below are true:
The bill header Issued By date is greater than or equal to the From Date filter specified on the Use Taxes screen.
The bill header Issued By date is less than or equal to the To Date filter specified on the Use Taxes screen.
The bill line has the Use Taxable checkbox selected.
The bill line has Use Tax Amount that has not produced a use tax transaction yet (BillLine.useTax <> Use Tax Amount Exported shown for this line on the Use Taxes screen).
Use Tax Transaction Generation
Once the Generate Transactions button is clicked for the selected bill lines, each bill line will produce a record in the TaxTransaction database table. This transaction can be used for BuildOps Sigma reporting purposes and will be used for generating the use tax journal entries in Intacct.
As soon as the use tax transactions are generated, the sync to Intacct will be automatically triggered. The bill lines with no more use tax to export will disappear from the Accumulated Use Taxes tab of the Use Taxes screen.
The transactions synced to Intacct will appear on the Transactions tab of the Use Taxes screen with the corresponding sync status:
Syncing - this value is assigned to the tax transaction if the sync is in progress.
InSync - this value is assigned to the tax transaction if the corresponding journal entry was generated in Intacct (only applicable to Intacct integrated tenants)
SyncFailed - this value is assigned to the tax transaction if the corresponding journal entry was not generated in Intacct (only applicable to Intacct integrated tenants)
In order to resync failed transactions, you will need to click the Resync Failed Transactions button on the Transactions tab of the Use Taxes screen.
Intacct Journal Entry Associated with BuildOps Use Tax Transactions
If you have an accounting integration with Intacct, for each tax transaction generated (exported on the Use Taxes screen), we will create a journal entry in Intacct as follows:
Posting Date = Bill Date
Journal = journal specified in the Accounting Settings → AP Taxes → Settings → Journal
Description = “BuildOps UseTax for BillLine {0}, Line Nbr” followed by the concatenated {taxName}:{jurisName}:{taxRate}“ Avalara tax codes
Account 1 = use tax expense account specified in the Accounting Settings → AP Taxes → Settings → Use Tax Expense Account. This account is debited for positive use tax amount and credited for the negative one.
if Inherit From Item List = True, then taken from the Item → Expense Account
when the item expense account is empty, the default expense account is taken from the Accounting Settings → AP Taxes → Settings → Use Tax Expense Account → Default Expense Account
if Inherit From Item List = False, then the default expense account is used from the Accounting Settings → AP Taxes → Settings → Use Tax Expense Account → Default Expense Account
Account 2 = use tax liability account specified in Accounting Settings → AP Taxes → Settings → Use Tax Liability Account → Liability Account. This account is credited for positive use tax amount and debited for the negative one.
Memo -
for Account 1 - “Use tax Expense”
for Account 2 - “Use Tax Liability“
Location - determined based on Intacct-BuildOps configuration
Department - taken from the related bill line
Project - taken from the related bill line
Sample Bill Readback from Intacct with Avalara Calculated Taxes in BuildOps
Scenario: I have a Purchase Order-BuildOps Bill transaction definition for a vendor invoice in Intacct. It is intended to post all the lines to an expense account and credit the Accounts Payable liability. I have this transaction definition read back to BuildOps.
I have all the vendors, items, jobs, and projects defined in BuildOps and synced to Intacct.
I have created the following Vendor Invoice in Intacct following the above mentioned transaction definition:
Pay to address - defaulted form the vendor contact (can be overridden with a different contact depending on your Intacct configuration)
3007 Santa Monica Blvd, Santa Monica CA 90404
Deliver to address - can be overridden with a different contact depending on your Intacct configuration
Date - 11/18/2024
Project - GS-6611521
Bill Items:
Item Name - Lumber - Solid Wood
Description - Lumber - Solid Wood
Quantity = 10
Amount = $1560.00
Once this vendor invoice is saved in Intacct, BuildOps will have the corresponding Bill generated. The related Avalara tax transactions will be created in Avalara in a Committed status, however, you will still be able to apply changes to the bill read back from Intacct.
Such a bill will have an Imported tag on it and a warning that Avalara Integration might require address and provider tax code changes.
In case you would like to edit any tax related attributes, we allow the following changes on the bills imported from Intacct:
Bill To Address
Ship From Address
Ship To Address
Provider Tax Code
Use Taxable checkbox
such a bill in BuildOps if necessary.
The corresponding tax amount changes are automatically sent back to the related vendor invoice in Intacct.
Avalara Tax Calculation on Invoices
In order to calculate taxes on the invoices we send the following data to Avalara (AvaTax API):
Company Information: Details about your company, including the company code specified in the Avalara Integration settings.
Transaction Type: Specifies the type of transaction, such as sales, purchase, or return.
We identify it automatically based on the document entered. The invoice will be identified as a Sales Invoice transaction type.
Document Date: The date of the transaction, which affects the applicable tax rules.
For the Invoices, we use the Issued Date field.
Customer Code: A unique identifier for the customer involved in the transaction.
We send the BuildOps unique identifier of the customer associated with the invoice.
Addresses:
Origin Address (Ship From): The location from which goods are shipped or services are provided.
For the invoices we send the Shipping Address from the document header Department.
If the header department has no address assigned to it, then we send the Business Address specified in the Company Settings.
If both department and business address do not exist, then we will send the invoice Billing Address.
This address is not explicitly exposed in the UI for now.
Destination Address (Ship To): The location to which goods are delivered or services are rendered.
For the invoices we send the invoice Property Address if the property is present.
If there is no property associated with the invoice, then we send the document Billing Address.
6. Line Items: Details of each item in the transaction, including:
Item Code: A unique identifier for the product or service.
We currently send the BuildOps unique identifier of the item (Item Name) to Avalara.
Description: A brief description of the item.
We send the invoice line Description to Avalara.
Quantity: The number of units sold or purchased.
We send the invoice line Quantity to Avalara.
Amount: The monetary value of the item.
We send the invoice line Amount to Avalara.
Tax Code: A code representing the taxability of the item.
We send the invoice line Provider Tax Code value to Avalara.
Sample Invoice with Avalara Calculated Sales Taxes
Scenario: I have created an invoice in BuildOps with the following attributes:
Property Address (this address is treated as a Ship To Address)
123 Mountain St Philadelphia, PA 19148
Issued Date - 04/23/2025
Bill Items:
Item Name - Pressure Treated Wooden Plank
Description - Pressure Treated Wooden Plank
Qty = 90
Amount = $14,175.00
Avalara automatically calculates Tax Amount for the invoice lines. To see the Tax Details, click the Tax Details button next to the Tax Amount total in the bottom area of the invoice.
The corresponding tax transaction can be found in Avalara in the Transactions list. It will have Uncommitted status.
Once the Invoice is posted, the corresponding transactions in Avalara become Committed. Only Committed transactions are included on tax returns. Transactions become locked and can’t be edited once they’ve been reported and filed.
If you void the invoice, the corresponding tax transactions will become Voided in Avalara.
Notes:
Custom (user-defined) provider tax codes are not supported in BuildOps.
Currently when Avalara is enabled, it is by default applied to both AP and AR document workflows. There is no way to enable Avalara for just AP or just AR documents.
Quotes do not support Avalara tax calculation. On quotes in BuildOps you will need to utilize the old sales tax rate selector.
Avalara calculated sales and use taxes are currently sent to Intacct only.
With Avalara enabled, adjustments are limited to Overpayment type only.
With Avalara enabled, during the bill readback scenarios from Intacct, the system will ignore the sales tax override coming from Intacct, since there is no reliable way to distinguish between the tax overridden and not. The bills read back from Intacct will simply trigger Avalara tax recalculation. If the tax override is necessary, it must be done in BuildOps.
If the item name in BuildOps exceeds 50 symbols, in Avalara it will be truncated to 50 symbols.
Invoice discounts are not supported by our Avalara integration, since they do not work at the line level.
Tax exemption certificates are maintained in Avalara (and not in BuildOps). We are currently working on syncing the full customer list from BuildOps to Avalara.