The taxability of a given product or service can vary from state to state, and in some cases, such as in Colorado, taxability can even vary from city to city. Location isn’t the only complication businesses face when calculating sales tax. Specific products and services can also have special or reduced rates and fees that need to be calculated at the point of sale.
This is why mapping products and services to an appropriate tax category in any automated tax system is both very important and very powerful.
Sales tax is often complicated. Properly mapping products and services in your tax system will ensure that the correct taxability determination, accurate tax rate, and any applicable fees are being calculated for every sales transaction.
The need for mapping products and services to tax categories is most apparent in these major areas: