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, it is important that you include accurate address information on your transactions.
Ideally a full street address - which includes the street, city, state, and zip code - allows for Anrok to calculate the most accurate sales tax for you.
Single jurisdiction tax rate
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, with the exceptions of countries like Canada where federal and local taxes may apply. In these cases, a local postal code is needed to accurately calculate local tax.
Multiple tax rates
If your transactions took place in a jurisdiction that has multiple jurisdictions taxing differently, a full street address or a zip code is required to calculate your tax. In the US, 9-digit zip codes provide more precision in determining locations and can 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.
Please note that without a valid address you may receive:
- incomplete assessment of your exposure profile
- increased risk at 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.