Given that certain states and most countries have a single tax rate on SaaS, while other states and a few countries have multiple jurisdictions with each having its own tax rates, you must include accurate address information on your transactions. Without a valid address, you may receive an incomplete assessment of your exposure profile and an increased risk at the time of audit.
We expect to have more invalid addresses at the historical onboarding step of the journey. Finance leaders may not have previously understood that collecting addresses was important for compliance. Onboarding on to Anrok tends to be a moment where users will want to get their data hygiene in order retrospectively and fix addresses in past transactions.
Tip: Ideally, a full street address, which includes the street, city, state, zip code, and country code, allows for Anrok to calculate the most accurate sales tax for you.
Information required for single tax rate jurisdictions
If your transactions took place in a jurisdiction that has a single tax rate, a 5-digit zip code should suffice for Anrok to calculate your sales tax on US transactions. For global transactions, a country is usually sufficient to calculate tax on global transactions, except for countries like Canada where federal and local taxes may apply. In these cases, a local postal code is needed to accurately calculate local tax.
Information required for multiple tax rate jurisdictions
If your transactions took place in a jurisdiction that has multiple jurisdictions taxing differently, a full street address and a zip code is required to calculate your tax. In the US, 9-digit zip codes provide more precision in determining locations. They can also help on the occasion when your transaction happens to fall on county lines (between two separately taxing jurisdictions).
For instance, in the US, if your transaction took place on a county line because you either couldn't provide a full street address or only had a 5-digit zip code, then Anrok would calculate the sales tax for the jurisdiction with the lowest return. Which essentially means an inaccurate sales tax calculation for your business.
Some jurisdictions with multiple sales tax rates are Canada, Colorado, New York, Pennsylvania, and Texas.
If you have any questions about the address information required for your transactions, feel free to contact us at email@example.com for more information.