Multiple Points of Use (MPU) policy

Overview

Multiple Points of Use (MPU) describes products (such as software, digital goods, and services) that are purchased at a single location but used in multiple locations.  This concept is particularly for when businesses purchase software or digital services that will often be used across multiple jurisdictions. Some jurisdictions, like Chicago, IL, acknowledge this business reality through a Multiple Points of Use exemption. Fundamentally, this exemption allows software buyers to only pay sales tax on the portion of the product used in that specific jurisdiction. This process is commonly referred to as apportionment of use.

Handling an Apportionment of Use request

Here's how the apportionment of use process typically works when a seller receives a Multiple Points of Use (MPU) certificate:

1. Exemption certificates are provided by the purchaser to the seller with MPU documentation at the time of purchase.
2. Non-taxable purchase results when the seller doesn't charge sales tax on the transaction.
3. Self-assessment becomes the buyer's responsibility for allocating the cost of the software/service to the states where it will be used.
4. Self-apportionment requires the buyer to pay use tax to each state based on the proportional use in that jurisdiction.

Anrok does not support the automatic apportionment of sales tax based on a customer's use within a jurisdiction. For this reason, you have two options to reflect an apportionment of use request on your invoices:

• Upload an MPU certificate or direct payment permit — You can upload an MPU certificate (with 0% listed as Percentage of Use [B/A] in the jurisdiction) or a direct payment certificate from the customer into Anrok. Once exempted from sales tax, the customer is responsible for paying the corresponding use tax where the product will be used. This option is the easiest for you, as it places the responsibility of MPU tax remittance on the customer. See Upload an exemption certificate.
• Make non-taxable versions of each line item — You can make a non-taxable version of each line item and charge the taxable line item based on the percentage of usage the customer will use. This option requires the most manual work on your end, but it can achieve the goal of creating an MPU transaction. See Set up your product IDs.

Both approaches ensure compliance with MPU requirements while providing you with the flexibility to choose the method that best suits your business processes and administrative capabilities. Whichever option you choose, ensure that you maintain proper documentation of the MPU arrangement and the customer's intended use allocation, as this information may be required for audit purposes or compliance verification.