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Avalara - Use Codes

Release Date: 4/28/23
Updated: 1/23/24
Version: 8.6 and Above

Use codes are used to determine why a customer is exempt from taxes. Use codes can be assigned at the customer type, customer, ship-to, and order levels. When determining the use code for an order, a hierarchy will be applied. If the order contains a ship-to and a use code has been assigned to the ship-to, the use code will be assigned to the order when taxes are calculated. If no ship-to use code has been assigned or the user is not using a ship-to, the application will check for a customer use code. If the use code does not exist, the application will check for a customer type use code. The use code can also be manually defined at the order header level.

Use codes are attached to customers, customer types, and ship-to codes via the _USECODE attribute.

For example, if customer  "002035" is non-taxable, you can assign an exemption reason to the customer that is different from the code defined in the Avalara Global Setup Default Cust Exempt Use Code. Bring up the customer in Change mode Accounts Receivable-> Maintenance-> Customer File Maintenance and click on the Attribute button. The user would then click on new, choose the _USECODE attribute, and click OK.

Once the screen is displayed, the user would click on the search button.

The user would then search to find the appropriate use code. 

Choose the correct use code and click on OK or press Enter to return the value.

Click on OK to save the attribute.

Whenever an order is entered for this customer in Order Entry without a ship-to specified, the use code will be passed to Avalara and the reason will be recorded. 

In summary, the purpose of the _USECODE attribute is to determine the nature of tax exemption. For taxable customers, we do not recommend adding the _USECODE to the customer or ship-to. Instead, use the taxable flags for the customer or ship-to and set them to "Y". However, if you set the customer or ship-to taxable flag to "N", we recommend adding the _USECODE so that Avalara can determine the nature of their tax exemption. See the following KB article: 


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