Overview
Address details are essential for calculating tax on your transactions, especially when dealing with different tax rates in different jurisdictions. When you’re just starting to collect sales tax, you might have some questions about the address information you need to calculate tax on a transaction.
We encourage you to provide as much address information as you have available for each transaction. While we can calculate tax with less address information, providing more address details leads to more accurate tax calculations. Common address fields include street address, city, state/region, ZIP/postal code, and country code.
While basic address information allows for tax calculations, additional details can often affect the tax determination. For instance, in the US, a 5-digit ZIP/postal code provides basic jurisdiction info, but a 9-digit ZIP+4 enables more precise tax calculations, especially in areas with special tax districts or local regulations. In Spain, a standard VAT rate applies, but the Canary Islands have different tax requirements. Some countries, like India, have specific reporting requirements that benefit from detailed address info for compliance.
Having limited address information may affect the following:
- Tax calculation precision
- Compliance with jurisdictional reporting requirements
- Documentation for tax audits
- Tax reporting capabilities
We expect you to have more invalid addresses at the historical onboarding step of the journey. Finance leaders may not have previously understood that collecting addresses was necessary for compliance. Onboarding to Anrok tends to be when users want to get their data hygiene in order retrospectively and fix addresses in past transactions.
Tip
Ideally, include all available address information for every transaction. Even in jurisdictions with simpler tax rules, additional address details improve tax calculation accuracy and help maintain compliance as regulations evolve.
FAQ
We understand you may have questions related to how Anrok uses address information to calculate tax. Many of these questions are common, so let's work through some of these commonly asked questions together:
Will Anrok use the shipping or billing address included on an invoice?The hierarchy for billing address information is Shipping address > Billing address > Payment method metadata. When a shipping address is provided, Anrok will prioritize it as the customer's applicable address. |
What is the minimum address information required for Anrok to calculate tax?In the US and Canada we require ZIP/postal code and country code to calculate tax. In all other global jurisdictions that we support, we only require country code. While these are the minimum requirements for address information, we do recommend collecting a full address from customers for tax purposes. There are some cases where a full address provides a more accurate tax calculation than a partial address, especially in cases where one ZIP/postal code can resolve to multiple taxable jurisdictions. In the US, 9-digit ZIP+4 codes provide more precision in determining locations. |
What happens if the address provided on an invoice is invalid?Anrok requires a valid address to be listed on an invoice to calculate tax. When Anrok cannot resolve and standardize the address, the invoice will appear on your Unprocessed transactions page with a
When this error occurs, you’ll need to review the transaction's address to see why the address provided is invalid. This may involve contacting the customer for a valid address. |
What happens if there is no address provided on an invoice?Anrok requires an address to be listed on an invoice to calculate the applicable address. Sometimes, Anrok can use payment method data to determine the transaction's taxability. When this is not an option, the invoice will appear on your Unprocessed transactions page with a |