Switching from AvaTax? Here’s how to do it.

INTRODUCTION AND EXPECTATIONS

Early in 2025, Shopify deprecated its integration Avalara’s AvaTax, effectively requiring merchants to adopt Shopify’s own tax engine — Shopify Tax — or to swap to Avalara for Shopify, a new app operated entirely by Avalara.

While this change helped to modernize aspects of the Shopify platform and give users additional options for handling their tax calculations, it also forced merchants to re-evaluate their relationship with Avalara and Shopify.

Continuing with Avalara’s integration requires a contracted term with Avalara and introduces the option for supplementary solutions to help with things like tax return preparation, filing, and exemption certificate management.

On the other hand, Shopify Tax doesn’t support SST directly and relies on Sovos for accurate filings, which comes at a significant cost.

Fortunately, TaxCloud can offer a better solution: you can use Shopify Tax for calculation and TaxCloud for filing – giving you great support, cost savings, and full compliance.

CONFIGURING SHOPIFY TAX

Setting up with Shopify

Before you can begin filing with TaxCloud, your store needs to be configured to collect tax correctly using Shopify Tax.

Fortunately, Shopify provides detailed, step-by-step documentation to help you get started. If you haven’t already activated Shopity Tax, you’ll want to complete that process before continuing with this official guide created by the Shopify team.

Using Shopify’s official documentation, you’ll be able to set up tax collection in your nexus states, create exemption automation for products and buyers, and import/export historical data as needed.

While our team can provide limited guidance through these steps, these systems and protocols are largely out of our hands. Shopify Support will be able to answer most of your questions through your initial setup and onboarding with the platform.

Here’s what you’ll need to do when configuring Shopify Tax:

• Enable Shopify Tax using Shopify’s built-in setup tools.
• Register for sales tax in states where you have nexus. (TaxCloud can help you complete these registrations).
• Assign product categories to enable product exemption automation.
• Apply tax exemptions for 828 customers and companies.
• Export any historical tax data needed for filing or backup.
• [Optional] Add tax registration IDs for each applicable state.

Even though you’ll be able to migrate some of this information directly from your AvaTax integration, some steps must be executed manually.

Getting these details right is critical to ensuring that your organization calculates, collects, and remits the appropriate amount of sales tax where those obligations are due.

Ultimately, your tax filings with TaxCloud will rely on the data imported from Shopify Tax. If these calculations aren’t correct, the filings that TaxCloud creates on your behalf will also be incorrect, leading to discrepancies, confusion, and potential penalties or audits down the road.

CONNECTING WITH TAXCLOUD

Onboarding with TaxCloud

Once Shopify Tax is calculating taxes correctly in your Shopify store, you’re ready to configure TaxCloud to begin filing on your behalf.

Unlike your previous setup with AvaTax, TaxCloud does not calculate your tax during checkout in this configuration. We’re relying on transaction data from Shopify Tax to create your returns. To do this, you’ll need to import your Shopify Tax data into TaxCloud by adding the TaxCloud integration to your Shopify store.

Our onboarding team will walk you through the process of setting up your account, collecting your exemption data, and verifying your state registrations. Once this is done, we’ll have all the information we need to file on your behalf.

You’ll also need to coordinate a clear cutover plan with Avalara (specialized migration guide found here) or Shopify Tax to ensure that filing responsibilities are cleanly transferred.

Every year, TaxCloud helps hundreds of companies migrate onto our platform.

Overlaps or missed deadlines during migration are one of the most common sources of errors during a transition.

If you’re not sure what to do next, don’t hesitate to check in with our onboarding team.

Our specialists are familiar with the common pitfalls and can help you avoid them so that your transition is as smooth as possible.

Here’s a list of what our team will need to complete your onboarding:

• A list of states where Shopify is collecting tax.
• Your SST ID (if already participating in the SST program).
• Customer exemption documentation (if applicable).
• Filing frequencies and registration IDs for non-SST states.

From there, our team will help you map out your first filing period with us and confirm your final filings with other providers. Once this is done, we’ll handle all reporting, submission, and remittance based on the data that Shopify Tax provides.

COORDINATING YOUR FILING OBLIGATIONS

Once you’ve selected your cancellation date and informed your team, you’ll need to clearly define which provider is responsible for your filings during the transition period.

If either Shopify Tax or Avalara is filing for you, it’s essential to carefully define your last filing period. Because of how filing periods and schedules work, it’s easy for these directions to be misunderstood.

When coordinating with either platform, be specific about your filing dates and periods so that it’s clear what paperwork should be completed by their team and when they should stop their filing processes.

During these discussions, make sure that your instructions align with your cancellation date. This way, Shopify/Avalara will stop filing on a set date and TaxCloud can pick up where they left off.

To prevent confusion, we recommend phrasing the request like this:

Once the handoff is complete, our team will work with you to remove your current provider’s access to your state portals (where possible), so that no additional filings are submitted after your cancellation date.

As a final checklist for this section, confirm the following:

• Confirm which returns Avalara or Shopify Tax will file and make sure your cancellation date aligns with your final filing dates.
• Confirm with TaxCloud when our team plans to take over filing on our behalf. Make sure this aligns with your exit from your current provider.

COMMON PITFALLS TO AVOID

Even well-planned migrations can run into issues when crucial steps and details are missed.

In this section, we’ll tackle some of the most common mistakes that organizations make when switching sales tax providers.

While preparing for the transition, take careful note of the errors in this section. Be sure to keep them top-of-mind as the migration takes place.

Using Shopify automated filing after cutover

Within your Shopify admin panel, you may see an option to activate Shopify’s automated filing service.

While this tool may look helpful, leaving it active after you’ve moved filing to TaxCloud can cause major problems. If both Shopify and TaxCloud attempt to file the same return, states may treat these entries as duplicate submissions and create unnecessary confusion.

When this isn’t properly handled, both tax platforms may file separately on the organization’s behalf — creating a double-remit – or fail to file at all because they believe the obligation lies with the other platform.

To prevent this:

• Confirm with Shopify Tax when filing should stop.
• Document the final filing period covered by Shopify Tax.
• Verify when TaxCloud will begin filing on your behalf, and confirm that information.
• Notify your internal team of the provider change.

Because of how filings work, determining exact dates can become a major source of confusion if instructions aren’t clear.

Although this may be frustrating, take extra steps to be crystal clear on which provider is responsible for filing within a given time period, and make sure that all remittance is accounted for as that responsibility shifts between platforms.

Not Removing Avalara’s Access from Tax Portals

Even after you cancel your move from Avalax to Shopity Tax, Avalara may still retain login access to your state accounts, if they had been filing for you previously.

If Avalara retains access to your tax portals, their automated system may continue submitting filings even after you’ve transitioned to Shopify Tax or TaxCloud.

In order to prevent this, take the following steps:

• Identify which states Avalara was actively filing in, with special attention paid to non-SST states.
• Revoke any third-party logins or delegated access granted to Avalara within state portals once Avalara has filed your final return. This will need to be done from the state portal, not from within Avalara.
• Update passwords or user roles where applicable. Changing the login details that the Avalara integration uses to validate its credentials with the state portal can stop filing, even if you’re having trouble removing the integration.
• Notify state departments that you’ve changed service providers, if required. However, keep in mind that notifying them may not prevent confusion if they receive conflicting filings from separate providers.

Our onboarding team will assist you with this process during your transition. We’ll let you know which accounts need attention and where you should focus your efforts to ensure that Avalara can’t submit returns after their final filing period.

However, this usually requires some manual effort on your part, as our team may not have the login credentials or user authority to make changes within your accounts.

FINAL STEPS

Pre-flight and launch

Once your TaxCloud onboarding is complete, your filing schedule is confirmed, and your handoff from Avalara or Shopify’s automated filing is finalized, you’re almost ready to go live.

At this stage, our team will help you review your configuration and confirm the right date for TaxCloud to begin preparing and submitting your filings.

While some businesses flip the switch as soon as onboarding ends, we recommend building in a short buffer period. During this time, your systems remain connected, but no filings are submitted. This allows you to double-check settings, data imports, and exemptions before the real work begins.

Going Live

Once TaxCloud is configured and tested, you’re ready to make the switch official.

When you launch, TaxCloud will take over live tax calculation and begin preparing filings on your behalf.

Typically, that involves each of the following:

• Verifying live transaction data from Shopify Tax is importing correctly.
• Ensuring exemption data is attached and active during the return process.
• Confirming that no automated filings are still being generated by Shopify or Avalara.
• Reviewing your filing calendar to confirm coverage for upcoming due dates.

Post-launch

Once TaxCloud is live, we’ll begin managing your state filings using the transaction and exemption data passed through Shopify Tax.

We’ll also monitor your tax obligations as they evolve, helping you stay compliant with changing rules and filing thresholds in each state. If you participate in SST, we’ll manage that program on your behalf, as well.

Most of these updates happen automatically, but we encourage you to regularly check your filing dashboard and reach out with questions.

Lastly, our onboarding and transition teams will be available for several weeks after your transition takes place. Lean on these resources while you have them in order to smooth out any kinks in the migration process.

After the migration is complete and things have had time to settle, we’ll put you in touch with our regular support team, who are better equipped to handle issues that fall outside the scope of the onboarding and transition process.

FINAL CHECKLIST

1. Shopify Tax Setup

• Shopify Tax is enabled and active in all applicable states.
• Tax registration IDs have been added in Shopify if you are already registered with a tax license.
• Product categories are assigned for exemption automation.
• B2B exemptions are configured for eligible buyers and companies.
• Historical tax data has been exported, if needed, for reference or onboarding.

2. TaxCloud Onboarding

• Onboarding with the TaxCloud team is complete.
• Exemption data has been imported into TaxCloud.
• SST ID (if applicable) has been submitted.
• Filing frequencies and registration details have been shared with TaxCloud.
• State portal access or delegated logins have been set up with your onboarding manager.

3. Provider Handoff Coordination

• Final filing period with Avalara or Shopify Tax is confirmed and documented.
• Filing start date for TaxCloud has been validated.
• Filing overlap has been avoided through coordinated communication.
• Avalara has been removed from state portals (where applicable).
• Shopity’s automated filing has been disabled in your tax settings.

4. Go-Live Readiness

• Shopify Tax is sending live transaction data to TaxCloud.
• Exemption data is being used correctly in return preparation.
• Filing calendar is confirmed and active within your TaxCloud account.
• Internal team is aware of the provider change and transition timeline.