Understanding customer tax location determination, compliance, and invoicing changes

This document applies to QuickBooks Online products sold by the Rocket Science Group legal entity (LE 132) in all areas/countries. This is for B2C customers.

It explains the new way Intuit determines where a customer is taxed. This affects the customer's billing, compliance, and interactions. It helps you understand the changes and handle customer queries.

Introduction: why updated tax handling?

Intuit, operating globally through legal entities like Rocket Science Group (LE 132), collects and remit taxes in registered countries. Previously, Obill used the customer's billing address to determine the tax location.

International indirect tax laws require using two or more non-contradictory data points to determine customer location and help ensure tax compliance for B2C customers.

The new tax location determination logic

Intuit's new system uses many data points to find a customer's tax location. It makes sure at least two of these data points point to the same country. This country is then said as the customer's tax location for taxation purposes.

Data points that may be evaluated include:

• Billing address country (company address)
• Payment method country
• IP address country (specifically, the last IP address of the Company Admin)
• Phone number country (from the company phone number)

Important Note for B2B customers: If a customer has a valid B2B Tax ID that matches their billing country, they are taxed based on the billing country as before, and this multi-data-point location evaluation isn't needed. This new logic primarily impacts B2C customers (those who haven't provided a valid Tax ID).

Why a customer might be blocked during sign-up

For new B2C customers signing up for a paid product or opting into a trial with upfront consent (resulting in a new realm):

• If the system looks at the available data points and two or more non-contradictory points don't match the customer's billing country, the customer isn't allowed to continue sign-up.
• Similarly, if the system is unable to find two matching non-contradictory data points at all (meaning the location couldn't be determined).

If a customer’s location doesn’t match their sign-up country or can’t be verified, they’ll see a prompt (for example, 'Confirm your location') and be asked to go back and update their info, or sign up in the correct country.

Confirming location changes during subsequent purchases and implications

For existing B2C customers:

• The customer's location is checked every 4 months.
• Location is also checked during actions like Opt-in, Add Product, Resubscribe, Add a BME Client in QuickBooks Online Accountant, or Transfer Billing to an accountant.

If, during one of these evaluations or purchase workflows, the system determines that the customer's set location has changed based on the 2+ data point rule:

• The customer will be asked to double-check the location change or update their information before continuing with the purchase.
• They will see a prompt (for example, "Confirm your location") stating that their location appears to have changed to a different country.
• They are told that if they continue, they will be taxed in the newly asserted country. 
• Once a location is set, it is used for all future tax calculations and estimates unless a new location is available.

Invoicing implications of tax jurisdiction changes

When a billing cycle or transaction (like an upgrade or downgrade) involves multiple tax jurisdictions—due to a mid-cycle location change—the system creates seperate documents for each tax jurisdiction:

• Despite multiple documents, the system continues to create a single bill with a net balance (positive or negative).
• A single net payment is collected for a positive bill, or a single refund is issued for a negative bill.
• In the customer's Billing and payment history window, the customer can expand the line to reveal the multiple associated invoices/credit note PDFs.
• Invoices and credit notes will comply with the tax jurisdiction of the customer's location (not the billing country). The invoice template will be per the tax country.
• The invoice will include verbiage indicating that taxes were charged based on the asserted tax location, which may differ from the billing country. For example, "You have been charged taxes per your tax location (Ghana)."

Customer notifications regarding tax location

Customers may receive notifications for the following reasons:

• Change in customer location detected: If the system determines the customer's set tax location has changed.
• Location could not be determined: If the system is unable to find two matching non-contradictory data points.

These notifications are sent to let the customer change their information so they can be taxed correctly. The customer receives notifications with a link to review and update their information.

• If the customer agrees with the change, they don't need to do anything. However, they may need to make sure this is done during a later purchase process, as mentioned in section 4.
• If the customer receives a notification because their location couldn't be determined, this notification serves as a warning. The customer is warned that if their location isn't determined for a specific period (relevant to non-compliance), their subscription may be terminated.

Implications of Non-Compliance

A customer account is marked as Non-Compliant in the following scenario:

• Location Could Not Be Determined: The system can't tell where the customer is because there aren't two matching data points available. If the location can't be determined for 12 months, the customer's subscription (all subscriptions associated with the non-compliant company/realm) is subject to termination. Customers are notified and warned about potential cancellation after 12 months of non-compliance.

Intuit tracks these non-compliant companies and how long they have been in this status.

Subscription cancellation due to Non-Compliance:

• If a customer's account remains Non-Compliant because their location couldn't be determined for 12 months, all subscriptions associated with that company/realm are subject to cancellation.
• If the asserted location is Singapore but the customer doesn't provide the required Postal code within 30 days, their subscription is subject to cancellation.

Handling cancellations (current initial state):

• Subscription cancellation due to tax non-compliance is planned as a manual process for the initial launch.
• The Agent (not the Care) team uses a Non-Compliance Tracking Report to identify companies meeting the termination criteria.
• The Agent will then manually cancel all the subscriptions for that realm.
• This manual approach is based on expected low-volume and can be used for monitoring. Future automation will be considered based on volume analysis. See Subscription Cancellation (Tax based on 2 matching data points).

How customers can update their tax address/information

Customers can update their information in a few ways that might affect location determination:

• Via the link in notification emails: The notifications about location changes or inability to determine location provide a link to a page where the customer can review their asserted location and provide/complete their address details if needed (for example, Postal code for a Singapore location). This page may use a Tax Profile widget. 

If the customer believes that the asserted location is incorrect, he should update the company information.

QuickBooks Online screenshots

QuickBooks Online Accountant screenshots

Updating Tax ID: Updating a Tax ID from the company profile page can trigger a location evaluation. Providing a valid B2B Tax ID matching the billing country should revert taxation to the billing country and make the customer B2B scope, bypassing the multi-data-point evaluation.

While agents can override the tax location with a valid proof of location, but Intuit's uses the data-point based location. Customers should ensure their billing address, payment method, and phone reflect their actual business location.

Expected customer questions and how to answer them

Here are some questions customers might ask and how to respond, based on the new logic and processes:

Why was I taxed differently this month/on this invoice?

Answer: Intuit must find your tax location based on many things we have on file, not just your billing address. This helps apply the correct taxes for your business location. Our system found your location based on [Concept of 2+ data points]. This resulted in taxes being calculated for [Country determined, if visible/applicable to Care].

Why did I get multiple invoice documents for one payment?

Answer: When your tax location changes mid-billing cycle, or if the charges on your bill span across different tax jurisdictions, separate documents are issued for those different tax amounts. The total amount due or refund stays the same, calculated as a single net bill. You can find all the related invoice and credit note PDFs linked to the transaction in your billing history.

Why couldn't I sign up for a subscription in my country?

Answer: Based on tax rules, we need to make sure your business location uses at least two pieces of information. When you signed up, our system couldn't confirm your location. This was either because the information you gave was from a different country than the one you chose for sign-up, or because we didn't have enough matching information. To continue, make sure your billing address, payment method, phone number reflects your actual business location. You can also try signing up by choosing the country that matches where your business is located.

Why did I receive a notification about my location changing or not being determined?

Answer: We regularly check customer account information to make sure the correct tax location, as required by law. You received this notification because your tax location may have changed or couldn't verified. This notification is to tell you about this. If your location can't be verified, it reminds you to make sure your account information is correct to avoid problems with your subscription in the future.

Why was my subscription cancelled?

Answer: Based on tax rules, we were unable to verify your business tax location using the information on file.

Scenarios:

• If your location was identified as Singapore but the required address details were missing, your account may be considered non-compliant for 30 days.
• If your location can't be verified for 12 months, it may result in termination.

We send notifications requesting updates. If the required information isn’t provided, the subscription is terminated under tax compliance rules. Make sure to check the reason and duration using the Non-Compliance Tracking Report (if accessible), or reach out to an AR Agent/lead.

How can I update my tax location or address?

Answer: To help find your tax location correctly, make sure your account information is correct and consistent across different data points. This includes your billing address, payment method country, and the country associated with your primary phone number.If you received a notification email, use the link provided to review and update your details.

What information does Intuit use to determine my location?

We look at many things on your account to find out where you pay taxes. These things include your billing address, the country where you pay, your IP address when you use the service, and the country of your main phone number. We need at least two of these data points to agree on a country to determine your tax location.

My billing address is correct, but you say my location is different. Why?

Answer: Tax regulations require us to use more than just the billing address to confirm your tax location. If two or more other data points show a country different from your billing address, the system will use that other country for tax calculations.

I started with a free trial—why am I being asked to confirm my location when upgrading?

Answer: While trials typically don't require tax validation, upgrading to a paid plan does. Intuit must confirm your tax location using multiple data points. If your details don't show a consistent country across at least two data sources, you’ll be asked to update or confirm them before payment.

I had a subscription earlier that got cancelled. Now when I try to sign up again, I’m blocked—why?

Answer: When you try to resubscribe, Intuit treats it as a new purchase and re-checks your tax location using current data. If two consistent data points can’t confirm your location, sign-up will be blocked to comply with international tax laws. Make sure your billing address, payment method, and phone number reflect your current location.

I don’t agree with the tax country assigned to me. Can you override it manually?

Answer: Currently, Intuit doesn't support manual overrides of tax location. The system uses multiple data points to help make sure compliance. If the location seems incorrect, update your profile details such as billing address, payment method, and company phone number to reflect your actual business location.