Understanding customer tax location determination, compliance, and invoicing changes

This document applies to QuickBooks Online (QBO) products sold by the Rocket Science Group legal entity (LE 132) in all served regions/countries, specifically for B2C customers only.

It explains the new way Intuit uses to determine a customer's tax location (jurisdiction) and the implications for billing, compliance, and customer interactions. It is designed to help you understand and address customer queries arising from these changes.

1. Introduction: Why updated tax handling?

Intuit, operating globally through legal entities like Rocket Science Group (LE 132), has a responsibility to correctly collect and remit taxes in the countries where we are registered. Previously, the system primarily used the customer's company address (which acts as the billing address) to determine the tax location when billing through Obill.

International Indirect Tax laws require determining a customer's location using two or more non-contradictory data points. The primary goal of this initiative is to help make sure tax compliance by adopting this multi-data-point approach for B2C customers.

2. The new tax location determination logic

Intuit's updated system evaluates several available data points for a customer account to determine their tax location. The system aims to find at least two non-contradictory data points that point to the same country. This country is then asserted 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 VAT ID that matches their billing country, they are taxed based on the billing country as before, and this multi-data point location evaluation is not needed. This new logic primarily impacts B2C customers (those who have not provided a valid VAT ID).

3. 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 evaluates 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).

In these scenarios, the customer will be shown a prompt (for example, "Confirm your location") indicating that their determined location is different from the sign-up country, or that their location could not be verified. They are instructed that they must go back and either fix their information or sign-up in the correct country.

4. Confirming location changes during subsequent purchases and implications

For existing B2C customers:

• The customer's location is re-evaluated periodically (every 4 months).
• Location evaluation also happens during certain subscription actions like Opt-in, Add Product, Resubscribe, QuickBooks Online Accountant (Add a BME Client), or Transfer Billing (to an accountant).

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

• The customer will be asked to confirm 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 asserted, it is used for all subsequent tax calculations and quotes unless a new asserted location becomes available.

Invoicing implications of tax jurisdiction changes:

When a billing cycle or transaction (like an upgrade or downgrade) involves charges and taxes from multiple tax jurisdictions (which can happen if the tax location changes mid-cycle), system creates multiple documents one per the 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)."

5. 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 asserted 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 provide the customer with an opportunity to correct their information so they can be taxed correctly. The notification will include a link directing the customer to an experience where they can review and update their information.

• If the customer agrees with the location change, no customer action is necessary (though they may need to confirm this during a subsequent purchase workflow 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.

6. Implications of Non-Compliance

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

• Location Could Not Be Determined: The system is unable to determine the customer's location because there are not two matching data points available. In this scenario, if the location cannot 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 if their location could not be determined 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 allows for monitoring. Future automation will be considered based on volume analysis. See Subscription Cancellation (Tax based on 2 matching data points).

7. How customers can update their tax address/information

Customers can typically 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 utilise 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 VAT 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 there is a technical capability for an agent to override the tax location back to the billing country if a customer provides proof of location, Intuit's current stance is to rely on the data-point determined location, and this override capability is not currently planned for use. Focus the customer on ensuring their data points (billing address, payment method, phone, etc.) accurately reflect their business location.

8. 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 is required by tax regulations to determine your tax location based on multiple pieces of information we have on file, not just your billing address. This allows us to ensure we are applying the correct taxes for your business location. It looks like our system determined your location based on [Mention the concept of 2+ data points] which resulted in taxes being calculated for [mention the country determined, if visible/applicable to Care].

Why did I get multiple invoice documents for one payment?

Answer: When your tax location changes partway through a billing cycle, or if the charges on your bill span across different tax jurisdictions, tax regulations require us to issue separate documents for those different tax amounts. However, the total amount due or refunded remains the same, as it's calculated as a single net bill. You can find all the related invoice and credit note PDFs linked to the single transaction entry in your billing history.

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

Answer: Based on tax regulations, we need to confirm your business location using at least two pieces of information. During sign-up, our system couldn't confirm your location, either because the information provided pointed to a different country than the one you selected for sign-up, or because we didn't have enough matching information. To proceed, please ensure your business information (like billing address, payment method country, and phone number country) is accurate and reflects your actual business location, or try signing up by selecting 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 periodically review customer account information to ensure we have the correct tax location on file, as required by regulations. You received this notification because our system detected a potential change in your tax location based on available data, or was unable to verify your location. This notification is intended to let you know about this, and if your location couldn't be verified, it serves as a reminder that you need to ensure your account information is accurate to avoid potential issues with your subscription in the future.

Why was my subscription cancelled?

Answer: Based on tax regulations, we were unable to verify your business tax location using the information on file. [If applicable for SG incomplete address: 'Specifically, while our system determined your location as Singapore, we were missing required address details.'] Our records indicate that your account was non-compliant for [state the duration, for example, 12 months for inconclusive, or 30 days for SG incomplete address, if visible/confirmable via report]. We previously sent notifications about this issue and the need to update your information. As the required information wasn't updated, the subscription was terminated in accordance with tax compliance requirements. (Confirm the specific reason and duration using the Non Compliance Tracking Report if you have access, or consult with an AR Agent/lead).

How can I update my tax location or address?

Answer: The best way to ensure your tax location is correctly determined is to make sure your account information is accurate and consistent across different data points like your billing address, payment method country, and the country associated with your primary phone number. If you received a notification email about your location, there should be a link in that email that takes you to a page where you can review and update your details.

What information does Intuit use to determine my location?

Answer: We evaluate multiple pieces of information on your account to determine your tax location, such as your billing address, the country associated with your payment method, your IP address when accessing the service, and the country of your primary 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. We look for agreement across multiple data points. If two or more other data points indicate a country different from your billing address country, the system will assert that other country as your tax location for tax calculation purposes.

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

Answer: While trials typically do not require tax validation, once you choose to upgrade to a paid plan, Intuit is required to determine your tax location using multiple data points. If your information doesn’t confirm a consistent country across at least two data sources, you’ll be prompted to update or confirm your details before proceeding with payment.

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

Answer: When you attempt to resubscribe, Intuit treats it as a new purchase and re-evaluates your tax location based on the latest information available. If two consistent data points can’t be matched to confirm your location, the system will block the sign-up to comply with international tax laws. Please ensure 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 does not support manual overrides of the tax location. The system determines your tax location based on multiple data points, and this approach ensures consistency and compliance. If you believe the system has incorrectly asserted your location, please review and update your profile details such as billing address, payment method, and company phone number to reflect your true business location.