Learn how to make sure you're using the correct address for tax collection.
QuickBooks Online will calculate your sales tax based upon the address inside the Shipping From / Location of Sale field. If your address isn't correct, under-collection or over-collection of taxes could result. This collection issue could cause penalties and interest.
|Tip: You can now change the address inside the Shipping From / Location of Sale field if needed. Validate each of your Shipping From / Location of Sale addresses to make transactions smoother.|
To ensure the most accurate amount of tax is collected use the USPS Zip Lookup Tool to validate your address. It will give you a zip code plus 4-digits to ensure complete accuracy. In this article, we'll show you how to use this tool.
How to use the USPS Zip Lookup Tool
When a clean address is entered into the USPS Zip Lookup Tool, you'll see a valid address with a Zip + 4 digits.
Fix an address failure
There can be times when an address fails in the USPS Zip Lookup tool.
When this happens, you'll see an “invalid address” result. This failure can be caused by missing or changed street numbers or general typos.
Example A: Incorrect address – 2510 2nd Ave in N. Birmingham, AL
Example B: Address typed correctly reads 2510 2nd Ave N in Birmingham AL. Switching the ‘N’ from city to the street fixes the problem.
Accurately calculate tax rate by address
Tax authorities map tax rates by street address, including local rates at the county, city and district levels. This means neighboring addresses could have different sales tax rates depending on where the boundary line for the local jurisdiction falls. A clean address is imperative.
Example A: 15809 Fountain Plaza Dr. Chesterfield, MO 63017 This clean address produces a Zip + 4-digit result in the USPS Zip Lookup Tool.
A calculation in QuickBooks Online with this clean address produces a tax rate of 9.863% because the address is actually inside the city limits of Ellisville for taxing purposes.
Example B: 15809 Fountain Plaza Dr. Chesterfield, MO 63017This address isn't recognized by the USPS Zip Lookup Tool and no Zip +4 digits are generated.
QuickBooks Online can only calculate the sales tax rate based on the information provided. In this case it produces a less accurate tax rate of 8.613%, placing the address inside the city limits of Chesterfield based on the city and 5-digit zip code.