Taxes

Tax calculation

Liftoff utilizes a trusted third-party service, called TaxJar, to calculate taxes for each order. TaxJar is an automated sales tax reporter used by other online retailers like Amazon, Walmart, and PayPal. TaxJar currently offers tax calculation for North America, Oceania, and all countries in the European Union.

Please refer to the end of this article for a specific list of nations and territories for which automated tax calculation is supported in Liftoff.

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Tax Questions?

You are ultimately responsible for the taxes you do or do not collect on behalf of your company and clients. Launchpad cannot offer advice concerning your sales tax obligations. Please consult a tax professional if you have questions.

Nexus

Sales tax nexus is, simply, a business connection to a state, territory, or nation. For calculation and legal purposes, there are two forms of nexus: physical and economic. A full discussion of these concepts is beyond the scope of this article; however, TaxJar provides excellent guidance.

For information on physical presence and the concept of tax nexus in general, see here.

For a discussion of economic presence and the laws governing it in the USA, see here.

Physical presence

In Liftoff, physical presence can be configured globally (at the subscriber level) for all of your accounts, and individually for each account in your portfolio.

Global "subscriber defaults"

You can configure one or more nexus locations that apply by default to all of your accounts and sites. These locations do not have to apply to every account; more on this later.

If you have Subscription Administrator permission within My Liftoff, begin this process by navigating to All Accounts > Ecommerce > Taxes. Click the "Add Default Location" button, select "Physical Presence," and fill out the form.

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If you have accounts already set up within your subscription, you can choose whether or not to add this Subscriber Default physical presence location to the list of locations within each individual account. If you choose to do this and need to make a change later within an account, you can!

Account-level

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Nexus controls for a single account

You can see that, after selecting "Add to All Accounts" above, the global default address now appears for the single account pictured here. When viewing your nexus locations for a single account, you have the following tools and controls:

  • Add Location: This adds a physical or economic presence location for this account only
  • Remove Subscriber Defaults: This sweeps away the global default addresses from the list for this account and leaves only the local ones
  • Remove: Takes away one, but not all, of the global subscriber defaults
  • Edit / Delete: Performs these functions for a local presence location; to edit or delete a subscriber default, you'll need to navigate to the All Accounts > Ecommerce > Taxes area

Economic presence

To add, edit, or remove an economic nexus presence location, either as a subscriber default or account-specific one, the locations and options within My Liftoff are identical to working with physical presence locations. The exception is that, in the case of economic presence, only a state need be selected.

Note that, at this time, economic presence tools in Liftoff only support US-based locations.

Tax settings

Liftoff allows you to control whether you collect taxes fully, partially, or on a per-user basis. To begin, navigate to the Settings tab in Ecommerce > Taxes > Settings.

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The settings for tax calculation and exemption are comprehensive; depending on your needs, the settings here can be overridden for individual products or customers.

Collect taxes

The default setting is this first one. The vast majority of sites will use this setting. Liftoff takes care of zero-tax situations based on location (e.g. for US states that don't levy a sales tax); however, if you need to configure tax collection on a per-user basis, you may do so. There are a couple of ways you can go.

Make all new registered customers tax-exempt

  1. Leave the first option ("Calculate and collect taxes when applicable") selected.
  2. Navigate to Customers / Contacts > Access Settings.
  3. In the Defaults area, tick the first box, labeled "Make new customers tax exempt."
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Note: This setting DOES NOT prevent tax collection from customers checking out as guests!

Make only some customers tax-exempt

  1. Leave the first option ("Calculate and collect taxes when applicable") selected.
  2. Navigate to Customers / Contacts > Customers / Contacts.
  3. For each customer you wish to make tax-exempt, click the Edit button next to their name, click the Settings tab, and tick the box labeled "Do not collect taxes for this customer's orders."
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This setting affects only the specified customer, and no others.

Failed tax calculation

On very rare occasions, an issue may arise with the TaxJar calculation service or with communication between TaxJar and Liftoff. When that happens, an incorrect tax amount will be calculated during all checkouts in Liftoff until the issue is resolved.

Navigating to All Accounts > Ecommerce > Taxes and clicking the Default Settings tab allows you to select how you'd prefer to handle this situation:

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You may select your preferred option according to comfort level and business needs

In the event that a tax calculation fails and you've opted to allow checkout (the second option in the image), two things will be true:

  • A notice will appear in emails generated by each order, informing you and your customer(s) that tax calculation has failed and will need to be collected manually.
  • You will need to return to all affected orders after the TaxJar outage has resolved in order to recalculate and collect applicable taxes. Liftoff has no automated way of doing this.

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No taxes, or no sales?

Selecting the "Prevent Checkout" option will ensure that no future problems arise for you when tax calculation fails; however, it also means that no one can buy anything on your account site(s) until the issue is resolved.

Tax exemption

The second option is the inverse of the first; it is the most restrictive of the three, and applies in all cases, for all customers and transactions. No further configuration is available if this option is selected.

Customer-specified

This allows you to leave the decision on tax exemption up to each of your customers. During checkout, at the Billing & Payment step, your customer will be presented with a Tax Exempt Status field. They'll select either "Taxed" or "Tax Exempt" and Liftoff will calculate the tax accordingly

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Note that this setting applies to both registered customers and guest customers.

TaxJar API ("BYO TaxJar")

Instead of configuring your tax settings and nexus locations within Liftoff, you can use a TaxJar account of your own, if you have one. Configure your TaxJar account in whatever way you need, then simply add your TaxJar API token to the field within Liftoff, and you're all set!

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You can find this value in your TaxJar account by navigating to Account > TaxJar API.

Once you enter a valid API token in this box and save, all previous tax settings within Liftoff will be overridden in favor of the configuration in your TaxJar account. From that point forward, for each order placed on your account, your own TaxJar account -- not Liftoff's -- will be used to manage nexus and calculate order tax. Liftoff order data will be posted in the Transactions area of your TaxJar account, too.

BYO TaxJar for one or all

You can enter your TaxJar API token for an individual account (Ecommerce > Taxes > Settings) or, for more "global" coverage, you can plug that token in at the subscriber level, affecting all accounts at once (All Accounts > Ecommerce > Taxes > Settings). If you select the latter, it acts as a set of default settings; any new accounts you create from that point forward will abide by your TaxJar settings, while any accounts you'd already created will follow their own individual tax settings.

Tax calculation locales

Liftoff considers local rules and regulations, and can automatically calculate taxes, for the following locations:

American Samoa, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Guam, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Northern Mariana Islands, Poland, Portugal, Puerto Rico, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom, United States, US Virgin Islands.

If you're transacting sales in a location not listed here, you will need to manage tax collection manually.