Sales Tax Computation

Sales Tax Computation

Often quotes include a section for tax determination, within which the tax amount (if applicable) is determined and then added to the overall quote amount.

In general, taxes on a quote include VAT, Sales Tax, etc and is influenced by many factors such as products or services sold, location of buyer, tax rate, exemptions, etc.

In addition each state in the USA can have 100s of Sales Tax jurisdictions. In fact, there are about 11,000 different authorities that impose a sales tax in the United States, so it becomes a challenge to keep up to date with various tax levels for each of these authorities. This is where a Tax computation software becomes valuable.

In the CPQ process, Tax computation is typically done after (a) Customer information is populated into the quote: typically from the CRM, (b) Products to be sold have been added to the quote line items table, typically from the Product Catalog (c) Sale/Delivery location has been added (d) Discounts have been provided, either at individual line items level or at the quote level. This ensures that the Tax computation is flexible enough to take each of these parameters into account.

Mobileforce CPQ provides integration with popular tax computation software in order to perform tax computations. Most tax computation software use various attributes relating to the customers, the locations, the products, and the discounts to compute taxes. Mobileforce is able to provide all of these attributes (extracted again via API calls by Mobileforce CPQ from various systems of record) and marshalled to a tax computation software via an API call that the tax computation software supports. Different tax computation software have different APIs with distinct parameters, so Mobileforce CPQ is able to create integrations to each of these tax computation software by providing a mapping from the CPQ parameters to the parameters required by the API.

This section describes such integrations for specific tax computation software.

TaxJar Integration

In order to use TaxJar, for computing Sales Tax, the following parameters need to be specified

Admin specified parameters

All of the following parameters are specified on a one time basis, when configuring Mobileforce CPQ Quote UI to use TaxJar.

  1. TaxJar token. Specified using the ADL Property Key taxjar-api-token. From your taxjar account, the "API Access" section will provide this information
  2. Action URL for "Create Action" in CPQ quote UI, to compute Sales Tax.
  3. TaxJar Input Fields standard mapping
  4. TaxJar Output Fields standard mapping
  5. taxjar_map_override any over-ride to standard mapping

TaxJar Field mapping

Note: the input fields are used in computing Sales Tax. These fields are specific to a deal or could also be specific to a line item. That is why these fields have "line_items." qualification.

The output fields are the ones computed by calls to TaxJar API. Some output fields (e.g., _shipping_tax_collectable are specific to the entire quote, whereas others (e.g., line_items.combined_tax_rate are again specific to individual line items).

Field Type TaxJar Field Mobileforce CPQ Field
input from_country company_country
input from_zip company_zip
input from_state company_state
input from_city company_city
input from_street company_street
input to_country to_country
input to_zip to_zip
input to_state to_state
input to_city to_city
input to_street to_street
input amount line_items_cpq_system_total
input shipping freight
input line_items.id line_items.cpq_id
input line_items.product_tax_code line_items.tax_code
input line_items.quantity line_items.cpq_quantity
input line_items.unit_price line_items.list_price
input line_items.discount line_items.discount_amt
output _shipping_tax_collectable freight_tax
output _line_items.combined_tax_rate line_items.tax_percent
output _line_items.tax_collectable line_items.tax_amt

How to Override Field Mappings

Sometimes, the field mappings are custom to a specific customer or a workflow. To support a different or a custom field mapping, an override prop key can specified, for example, as follows

Code snippet

<prop key="taxjar_map_override">{"line_items.unit_price": "line_items.net_total_price ","line_items.discount": "" }</prop>

Avalara Integration

Avalara is a cloud-based software that automates various aspects of tax compliance. In the context of Mobileforce CPQ, Avalara's tax calculation (AvaTax) is used to complete a quote by adding tax to the cost of products and services sold. Please note that Avalara also offers other software products such as document management, reporting, and e-invoicing, which are outside the scope of the Mobileforce CPQ integration. Avalara AvaTax platform supports tax types, such as (a) sales tax, (b) VAT, (c) GST, (d) excise, (e) communications, (f) lodging, and (g) customs duties.

Avalara account information

In order to integrate Mobileforce CPQ with Avalara, the following information is needed from an Avalara instance:

  1. Avalara Account Number: a 10-digit number used to authenticate the API calls
  2. Avalara License Key: a 13-character or 16-character string used to authenticate the API calls to Avalara.
  3. Avalara credentials: Username & Password: used to log in to the Avatax Admin Console.
  4. Company Info: this consists of two parts:
    • Company Code (a unique code that identifies your company in the AvaTax account ), and
    • Company ID (a unique identifier for your company in the Avalara database, typically a 6-digit number).

To find your Company Code, in your

AvaTax account, click the Settings tab and select Company details.

Note

The Company Code is a required field in order for the Avalara integration to succeed.

To find your Company ID, just look at the URL for your Avalara instance.

Note

If a company has two CRM instances (and hence two CPQ instances) such as a stage and a production instance, then you'd also need two Avalara accounts/instances as well.

Tax Codes

A tax code is a unique label that is used to group Items (products, services) together. Tax codes typically identify categories of similar products, services, or charges, and are used to identify which tax rules and rates to apply to a specific charge.

There is a one-to-many relationship between tax codes and products. For example, the tax code "Apparel" can map to hundreds of product SKUs for clothing in various sizes and colors. For many companies, a single tax code, such as "Internet Service" is applicable to all products sold.

Note

A key to sales tax computation using Avalara is to map each product and service in your Mobileforce Product Catalog to an Avalara Tax Code. This mapping would then be used to compute sales tax for each product and service that is included in the line-items tables of your quotes.

More details about the Avalara Tax Code can be found here

Note

Tax codes are also useful because certain products and services (mapped to specific tax codes) are taxable in certain states and not taxable in others. Tax codes abstract this distinction.

Address for tax computation

In destination-based (or interstate) ecommerce transactions, the shipping address (and not, say, the billing address) is used for tax computation.

However, in Origin-based sales tax computation, the address where the sold items originate is used to compute sales tax.

Since shipping addresses need to be accurate, not just for delivery, but also for tax computation, Avalara provides a mechanism to validate and convert addresses to USPS addresses.