Automatic Taxes for Payment Links

Automatic Taxes for Payment Links

Businesses now have the ability to apply automatic taxes on Payment Links, ensuring seamless and accurate tax calculations during checkout. This feature is designed to simplify tax management for both one-time and recurring products, improving the overall checkout experience for customers and businesses alike.

Scope and Applicability:

• Applicable for both one-time and recurring products: Automatic taxes apply to all types of products, ensuring consistent tax application for future recurring transactions.

• Ensures accurate tax application for recurring products: Taxes are recalculated for each subsequent transaction, maintaining accuracy over time.

Requirements for Automatic Taxes:

• A valid U.S. state and postal code must be provided for the invoice contact to ensure the correct tax jurisdiction.

• Each product must have a tax category assigned, or a default tax category should be set in the payment settings.

• Address collection must be enabled during checkout to apply accurate tax calculations based on the buyer’s location.

How to Enable Automatic Tax Calculations:

1. Navigate to:
   Payments -> Settings -> Taxes.

2. Enable automatic tax calculation:
   Toggle the automatic tax calculation feature to ON.

3. Select nexus addresses/states for tax collection:
   Indicate the states where your business has a tax nexus and should collect taxes.

4. Define a default product tax category:
   Set a default tax category for products in case an individual product tax category isn’t specified.

Specifying Individual Product Tax Categories:

When creating or editing products:

• Go to Payments -> Products.

• Assign a specific tax category for each product to ensure the appropriate tax rate is applied during checkout.

By enabling automatic taxes, businesses can streamline tax calculations and improve the accuracy of their tax collection efforts across all payment links.