Tax Calculation is based on both Origin (Warehouse/s) and Destination (Ship-to) addresses. Within the addon you have a "Validate Address" button added to your BP Master Data window, your Warehouses setup window and to your marketing document.

Also, Avatax includes the functionality to validate your destination addresses as a bulk, Please check following video.

As you can see from the video, the functionality is quite simple to use and helps you to make sure your addresses are correct.

In the header part of the Bulk Validator you can choose from many filter options to narrow your search and the Load Data button to show you the result of your search. That result will be shown below where you can either select all (with the check all option) or the ones you need.
Once selected the addresses that you'd like to check/update, in the lower part you'll have the "Validate Address and update..." checkbox marked by default and you should leave it that way for the solution to properly work.
Also you have the checkbox "Update Address Tax code with...." this option is not mandatory, but recommended so you can make sure that "Avatax" will be the default tax code. If you choose this option, once the validation process finishes, you'll see which one was the previous Tax code used in that address under the "Tax Code" column.
The "Result" and "Message" columns will show you which addresses were successfully updated and which weren't and why, allowing you identify what needs to be checked on those specific addresses. Next to the Message column, and for better control, you'll have a detail of the validation result per field (Street, City, County, State, etc)

The validation is against Avalara/USPS database, you can check an address by following this link ZIP Code™ Lookup | USPS. In case you have a failed validation but you consider the address should be valid anyway, please contact your Avalara Account Manager.