Over the years, I have developed strong opinions about what good AvaTax configuration in NetSuite looks like. Those opinions are not theoretical — they are informed by implementations that scale, audits that go smoothly, and tax engines that do exactly what they are supposed to do without constant firefighting.
At the center of all of this is a simple principle:
NetSuite must remain the single source of truth for transactional data, while Avalara must remain the single source of truth for tax determination and exemption management.
When those responsibilities blur, long‑term complexity and risk increase dramatically.
NetSuite as the System of Record for Data Quality
Successful AvaTax implementations begin before tax is ever calculated. They begin with disciplined data management in NetSuite.
NetSuite is simply better than Avalara at:
- Managing customer and item master data
- Enforcing data completeness
- Supporting operational workflows
- Empowering users through saved searches and alerts
While some data can be configured directly in Avalara, doing so bypasses the operational controls that NetSuite already provides and introduces unnecessary fragmentation. Additionally, access to the Avalara Admin Console is typically restricted to a small group, whereas customer and item records in NetSuite are managed by broader operational teams. That reality should influence where data lives.
Items: Tax Codes and Schedules Are Not Optional
Every item that can be sold or resold should be fully configured before it ever reaches a transaction.
At a minimum:
- Items should always have an AvaTax code
- Items should always have an appropriate tax schedule
This is where NetSuite shines. Simple saved searches can flag:
- Items for sale missing AvaTax codes
- Items missing tax schedules
- Newly created items that do not meet tax configuration standards
With scheduled email alerts, these issues can be identified and resolved immediately — long before they surface in filings or audits.
Customers: Always Taxable by Default
A core rule I follow religiously:
All customers should be set as taxable in NetSuite, regardless of exemption status.
In practice, this means:
- Customers are always marked taxable
- AVATAX is always used as the Tax Item
- No exemption logic is embedded in NetSuite
Again, saved searches can enforce this standard and notify stakeholders when a customer record deviates. The goal is simple: NetSuite sends clean, consistent data to Avalara every time.
Exemptions: Avalara ECM Is the Only Source of Truth
Customer exemption data does not belong in NetSuite.
Storing exemption flags, states, or certificate details in NetSuite inevitably leads to confusion, mismatches, and reconciliation issues between systems. Avalara’s Exemption Certificate Management (ECM) exists for a reason — and it should be used exclusively.
With ECM now fully embedded into the Avalara Admin Portal, there is no longer any justification for duplicating exemption data elsewhere.
Why ECM Pro Is a No-Brainer
For organizations managing a meaningful volume or variety of exemption certificates, ECM Pro delivers immediate ROI.
Key advantages include:
- AI-driven certificate ingestion
- Automatic handling of multi-jurisdiction certificates
- Elimination of manual, state-by-state exemption setup
- Built-in campaign management for expiring exemption certificates
That last point is often overlooked but extremely impactful. ECM Pro allows you to run proactive campaigns that notify customers when their exemption certificates are approaching expiration and request updated documentation ahead of time. Customers are directed to securely upload new certificates directly into your ECM environment for your review and validation.
This approach eliminates the need to manually track expirations, manage email outreach, or store sensitive documents outside the system. More importantly, it shifts accountability to the customer while ensuring certificates are collected through a safe, secure, and auditable workflow.
What once required painstaking manual configuration and follow-up can now be handled accurately and efficiently, reducing both operational burden and audit risk.
Non‑Negotiable Operating Practices
Beyond configuration, long‑term success depends on operational discipline. These are practices I consider mandatory in any NetSuite + AvaTax environment:
- Default all customers to taxableLet Avalara determine exemption status — not NetSuite.
- Bulk‑validate addresses regularlyUse Avalara’s bulk validation tools to confirm accuracy for subsidiaries, customers, and vendors. Address quality directly impacts tax accuracy.
- Perform a mid‑month transaction reviewA quick review in the Avalara Admin Portal can catch issues early, before month‑end close or filings.
- Never edit tax on closed‑period invoicesIf an invoice requires tax correction in a closed period, the correct approach is to credit and rebill. This preserves auditability and ensures tax filings remain accurate.
Final Thoughts
AvaTax is extremely powerful — but only when paired with disciplined master data management and clear system boundaries.
Let NetSuite do what it does best: managing operational data with strong controls. Let Avalara do what it does best: determining tax and managing exemptions. When those roles are respected, the result is a tax engine that scales cleanly, survives audits, and requires far less ongoing maintenance.
That, ultimately, is what good configuration looks like.
