Calculating tax dynamically for each invoice is a complex chore for any SaaS or eCommerce business. TaxJar is built to handle sales tax and stay updated with tax regulation changes. This is possible with its optimized tax calculation engine called SmartCalcs, which is also used to tackle your business' tax complexity.
TaxJar has 3 main features to offer- SmartCalcs , Reports and AutoFile . SmartCalcs is used to calculate Sales Tax based on the product and region. Reports is used for providing a tabular representation of your sales tax metrics. AutoFile, as the name indicates, automates filing of your sales tax returns.
Using the Chargebee - TaxJar integration, you can:
Setup your TaxJar account .
Make sure your Organization address in Chargebee is up to-date.
It is strongly recommended that you follow the steps listed below in sequence. This is to ensure that exemptions are in place before taxes are applied.
Start by navigating to Settings > Third-party Integrations and selecting TaxJar. Click Get Started and enter your full access TaxJar API token in the field that pops up.
You can use the TaxJar Sandbox API token to connect TaxJar to your Chargebee Test site and test out the integration.
While connecting TaxJar to your Chargebee Live site, use the TaxJar Live account API token.
You cannot test Reports and AutoFile features of TaxJar using your Chargebee Test site. This is because, invoices and credit notes in Chargebee Test site cannot be synced with your TaxJar Sandbox account.
In case you need to test the Reports and AutoFile features of TaxJar, we allow you to do that by connecting a TaxJar Live account to your Chargebee Test site. Contact [email protected] and we will enable the compatibility for you.
Organization address is crucial in understanding your business' ground zero while calculating taxes. Tax collection in Chargebee is not possible without specifying your organization's address.
In the screen that shows up next, your organization address present in Chargebee would be displayed. If you find it to be incorrect, update the right address using Change address option.
Nexus is used to determine your business' connection with the state for tax purpose. It is only available for US region. Sales tax nexus dictates that, if your business satisfies at least one of the criteria set by the state, you are liable to collect and remit sales tax.
Nexus is roughly determined based on the following criteria,
For more information on nexus, take a look at TaxJar's Sales Tax Nexus article.
Chargebee simplifies the process of tax calculation by syncing your Nexus Addresses configured in TaxJar.
Toggle the setting to allow Chargebee sync your Nexus Addresses configured in TaxJar. This would allow the list of Nexus Addresses in TaxJar to be automatically updated in Chargebee.
The advantage of this being: Chargebee will only make API calls to TaxJar when the customer belongs to a state where you have nexus. This in turn reduces your TaxJar payable as it is calculated based on the number of API calls.
It is essential to validate addresses if you're selling physical goods, primarily to ensure that order fulfilment happens effectively. The validation setting checks whether your existing customers have completely valid shipping address, to aid in order fulfilment.
Addresses which were found to be partially valid or completely invalid will be called out as an error.
However, while calculating sales tax, partially valid address is sufficient.
Chargebee can only sync invoices and credit notes for US region and transactions made using USD currency.
This is to be in line with TaxJar, which supports automatic tax filing only for US, and reporting and filing only for USD currency.
Address validation is done to ensure that addresses associated with customer profiles are valid, and can be relied upon while applying tax.
Address validation runs a check of existing customer addresses to validate its authenticity. You can always click Run Check to see if any of the customer addresses needs attention. The errors post-validation are,
Click on the error and it will take you to the filtered list of customers with failed address validation.
All the settings made above can be found under Manage Preferences option in the Integration overview page.
Product codes are used to map Chargebee Plans and Addons to the product categories present in TaxJar. This is done to apply tax and appropriate exemptions, if any.
You can find the TaxJar product code field in each of your plans, addons, and charges price points page in Chargebee. Make use of the product codes mentioned in TaxJar to fill in the field.
The action you need to configure for specific scenarios are tabulated below,
|The plan/addon is partially taxable||You need to enter the TaxJar product code to determine the type of product and apply tax accordingly.|
|The plan/addon is fully taxable||You can ignore the TaxJar product code field.|
|The plan/addon is exempt from tax||You must provide the TaxJar product code to apply exemption.|
Tax exemption is usually done in cases where the customer is a whole-sale dealer, government agency, etc.
Classic UI users
The tax exemption checkbox in Classic UI is shown here:
You can apply exemption,
For existing customers: Navigate to the individual customer profile and click Change Customer Details option on the right pane. Mark the customer is exempt from tax payment and provide the TaxJar Exemption Category to specify the reason.
For new customers: The customer should be marked as exempt while being created. Also, you need to provide the TaxJar Exemption Category to specify the reason for exemption.
During certain scenarios, TaxJar can choose to set aside the exemption applied to your Chargebee Customers. One such common scenario is when the customer is considered tax-exempt in one region but is subject to taxes in another region.
This is an important step as your TaxJar integration is incomplete without enabling it after the integration.
Go to Settings > Configure Chargebee > Taxes and select the country for which you want TaxJar enabled(TaxJar is only supported for US and Canada in Chargebee).
If you have been using other means(manual configuration, Avalara) of tax calculation in Chargebee and switching to TaxJar, your previous configurations would be cleared and TaxJar would be made the sole tax calculation mechanism for that region.
If you wish to unlink the integration, go to the regions for which you have configured TaxJar and remove TaxJar as a mode of tax calculation. Then go to the TaxJar integration page and click Unlink Integration.
TaxJar integration is only available for US and Canada regions in Chargebee.
The hosted pages theme "Rhapsody" does not support TaxJar integration.
Sync of invoices and credit notes can be done only for USD currency and US region invoices to TaxJar.
Shipping Address Validation is available only for US region.
1) What happens to invoices synced with TaxJar when I delete the invoices in Chargebee?
If the synced invoices are voided or deleted in Chargebee, they would be deleted in TaxJar.
2) I had to leave the integration mid-way and when I came back to complete it, the integration disappeared from the Third-party integrations page. Where can I find it?
No worries, you're progress on the integration would be saved in the integration setup and you can carry on from where you previously left. You can find the integration in the top of the Third-party integrations, separately under the Apps connected header.