Tax Calculations

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Overview

The /calculate endpoint allows you to determine the amount of sales tax to charge on a transaction. By providing details such as customer information, line items, and pricing, you’ll receive accurate tax calculations based on applicable jurisdictions and rates.

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Factors Affecting Tax Rates

Our system considers the following factors to determine the appropriate tax for a transaction:

1. Seller Information

   • State Registrations:
     • If your corporation is not registered to pay taxes in a state, the /calculate endpoint will return a tax amount of 0 for that state.
     • If your corporation is registered in a state, we calculate the tax amount based on that state’s rates and rules.

2. Product-Specific Information

   • Product Taxability:
     • Product Configuration: Each corporation can define and manage its product catalog via our /products endpoints. (Coming soon)
     • Product Code Assignment: For every product in the catalog, you can assign a specific product code using the API.
     • Tax Rate Computation: When the /calculate endpoint is called, each line item includes a product id. We use this id to retrieve the pre-configured product code for that product, determining its taxability for the transaction.
       • If a product is classified as non-taxable based on its product code, the tax amount for that specific line item will be 0.
       • If a product is taxable, the tax is calculated based on the product’s price and applicable tax rates.

3. Customer Information

   • Shipping Address: We compute the tax rate based on the shipping address provided for each transaction.
   • Customer Exemptions: Transactions can be exempted from sales tax based on properties of the customer making the purchase. You can read more about these exemptions here.

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Sample Calculation Object

The /calculate endpoint returns a JSON object containing the transaction details and calculated taxes.

Example response:

{
  "corporation_id": "corp_12345abcde",
  "transacted_at": "2023-09-15",
  "customer_details": {
    "shipping_address": {
      "address_line_1": "123 Main St",
      "address_line_2": "Apt 4B",
      "address_line_3": "",
      "postal_code": "90210",
      "city": "Beverly Hills",
      "state": "CA",
      "country": "US"
    },
    "customer_id": "cust_98765zyxwv"
  },
  "invoice_currency": "USD",
  "subtotal": 119.98,
  "line_items": {
    "items": [
      {
        "id": "item_111aaa",
        "amount": 99.99,
        "quantity": 2,
        "tax_code": "TPP",
        "product_id": null
      },
      {
        "id": "item_333ccc",
        "amount": 19.99,
        "quantity": 1,
        "tax_code": "TPP",
        "product_id": null
      }
    ]
  },
  "tax_currency": "USD",
  "total_tax_due": 9.9,
  "total_tax_rate": 8.25,
  "tax_breakdown": {
    "rates": [
      {
        "jurisdiction": "California",
        "jurisdiction_type": "State",
        "amount": 13.2,
        "rate": 6.0
      },
      {
        "jurisdiction": "Los Angeles County",
        "jurisdiction_type": "County",
        "amount": 3.3,
        "rate": 1.5
      },
      {
        "jurisdiction": "Beverly Hills",
        "jurisdiction_type": "City",
        "amount": 1.65,
        "rate": 0.75
      }
    ]
  },
  "total_amount": 238.12
}