This guide explains how to set up the Avalara Tax Compliance app in your Shopify store. It covers installation, connection, product transfer, settings review, and activation.
Quick answer
- Install the Avalara Tax Compliance app from your Shopify admin and choose whether to connect to your Avalara production or sandbox account.
- Sign in to Avalara, confirm the connection status, check that your products transferred, and review nexus and product taxability settings.
- Activate the app by going to Settings > Taxes and duties in Shopify and selecting Activate Avalara Tax Compliance under the Apps section.
- Activating the new app automatically deactivates the legacy AvaTax for Shopify Plus app if you were previously using it.
Install the Avalara Tax Compliance app from Shopify
Start by installing the Avalara app in your Shopify admin. This creates the connection that allows Avalara to receive transaction data from your store and return tax calculations.
- Sign in to your Shopify admin.
- In the Shopify App Store, search for the Avalara Tax Compliance app or navigate to it directly from the Shopify admin.
- Select Install to add the app to your Shopify account.
You must be signed in as a Shopify administrator to complete this step.
Choose your Avalara environment and connect
After installation, choose which Avalara environment to connect.
On the Avalara for Shopify page in your Shopify admin, you will see two connection options:
| Option | What it does |
|---|---|
| Connect | Connects your Shopify store to the default Avalara company in your production account for live tax calculation. |
| Connect to your sandbox account | Connects your Shopify store to the default Avalara company in your sandbox account for setup testing. A sandbox requires a separate subscription. |
Select the option that matches your current setup phase. After selecting your environment, the app will prompt you to sign in to Avalara and authorize the connection. Enter your Avalara credentials and follow the prompts to complete the authorization.
Once connected, return to the Avalara for Shopify page in Shopify. Select Save to preserve your connection settings.
Confirm connection and product transfer
After connecting at Shopify, verify the integration is working.
- Sign in to your Avalara account.
- Go to the Connect to Avalara page.
- Check the status indicator: Connected (green) means the connection is active. Not connected (yellow) means the connection did not complete.
If the status shows Not connected, repeat the connection steps in Shopify and confirm you authorized the Avalara integration.
Next, confirm that your products transferred from Shopify to Avalara. This ensures Avalara can apply the correct tax codes and rates to each item. The product transfer happens automatically after you connect the app. Depending on how many products you have, this can take a few minutes. Check that the product list in your Avalara account matches your Shopify catalog before proceeding.
Review nexus and product taxability settings
After products transfer, verify your settings in Avalara to ensure accurate tax calculation.
Go to Integrations > Manage Integrations in Avalara. On the My integrations tab, locate the Avalara for Shopify tile and select Manage settings.
Review the following settings:
- Nexus: Confirm that your active nexus states are current. Avalara calculates tax only in states where you have nexus.
- Product taxability: Check that each product has the correct tax code assigned. Common tax codes include general tangible goods, clothing, and software subscriptions. Incorrect tax codes lead to incorrect tax amounts.
- Buyer exemptions: If you sell to tax-exempt customers, confirm that exemption certificate settings are configured.
You can also select Show all settings to access advanced configuration options.
After reviewing, select Confirm to save your changes. An Activated popup will appear. Close it to continue, or select Activate if you are ready to enable tax calculation immediately.
Activate Avalara Tax Compliance in Shopify
Once you have reviewed your settings and confirmed your products transferred, activate the app to start calculating tax on orders.
- From your Shopify account Home page, go to Settings > Taxes and duties.
- Under the Apps section, locate your AvaTax app.
- Select Activate Avalara Tax Compliance.
The Avalara Tax Compliance app will now display an Active status.
Activating the new app automatically deactivates the legacy AvaTax for Shopify Plus app if it was previously installed. The legacy app will not be uninstalled, but it will stop calculating tax.
Send a test transaction
After activation, send a test transaction from Shopify to confirm that tax calculation is working correctly.
Create a test order in your Shopify admin using a valid address in a state where you have nexus. Complete the checkout process and verify that Avalara calculated the correct sales tax rate for the address and product type.
Check the transaction details in Avalara by going to Transactions in your Avalara account. The test order should appear in the transaction list with the correct tax amount.
Common setup issues and fixes
| Issue | Cause | Fix |
|---|---|---|
| Connection status shows "Not connected" in Avalara | Authorization did not complete or was interrupted | Return to Shopify, go to the Avalara app settings, and reconnect by selecting the environment option again |
| Products did not transfer to Avalara | Product sync is still in progress or connection failed | Wait a few minutes for the transfer to complete, then check the product list in Avalara; if still missing, verify the connection status |
| Tax is not calculating at checkout | The app is installed but not activated in Shopify | Go to Settings > Taxes and duties in Shopify and select Activate Avalara Tax Compliance |
| Test transaction does not appear in Avalara | Connection is active but transaction data is not syncing | Confirm the company selected in the integration matches the company you are viewing in Avalara; check that the store is connected to production, not sandbox |
What about transaction sync and returns?
The Avalara for Shopify app calculates tax at checkout in real time. It does not automatically sync completed transactions to Avalara for returns filing. If you need to import Shopify transactions into Avalara for filing, you must set up the Avalara Extractor for Shopify separately.
The extractor syncs historical and daily transactions from Shopify to your Avalara account. You configure it by going to Settings > Integrations in Avalara, searching for Avalara Extractor for Shopify, and following the setup flow.
Expert tip: Disable transaction imports in your connector first
If you are using the Avalara Tax Compliance app (the connector) alongside the extractor, turn off transaction importing in your connector settings before setting up the extractor. Running both will create duplicate transactions in Avalara, which complicates reconciliation and filing.
How Galvix can help with Shopify sales tax compliance
Avalara calculates tax at checkout, but preparing and filing returns in each nexus state still requires reconciling transaction data, managing filing schedules, and keeping state registrations current.
Galvix is a managed compliance service. The team connects to your Shopify store, reconciles transaction records, prepares returns for every nexus state, and files them on schedule. You review and approve each return from your dashboard. Setup takes 2 to 7 business days, and most customers spend 5 to 20 minutes a month on sales tax after that.
If managing Shopify sales tax filings is taking up too much of your team's time, book a demo to see how Galvix can help.
FAQ
Does the Avalara Tax Compliance app work with all Shopify plans?
Yes. The app is available for Shopify, Shopify Advanced, and Shopify Plus. It replaces the legacy AvaTax for Shopify Plus integration.
Can I test the setup before activating tax calculation on live orders?
Yes. Connect the app to your Avalara sandbox account instead of production. A sandbox requires a separate Avalara subscription, but it allows you to configure settings and send test transactions without affecting live orders.
What happens to the legacy AvaTax for Shopify Plus app when I activate the new app?
Activating the Avalara Tax Compliance app automatically deactivates the legacy AvaTax for Shopify Plus app. The legacy app remains installed but stops calculating tax. You can uninstall it manually if you no longer need it.
Why is my test transaction not showing the correct tax amount?
Check nexus settings, product tax codes, and the test address. Avalara calculates tax only in states where you have active nexus. Verify the product has the correct tax code assigned and the test address is valid and located in a nexus state.
Do I need to install both the Avalara Tax Compliance app and the extractor?
Not always. The Avalara Tax Compliance app calculates tax at checkout. The extractor syncs completed transactions to Avalara for returns filing. If you are filing returns through Avalara, you need both.
