Tax Calculation

Overview

Accurate tax calculation at checkout is a legal requirement, not an optimization. In the United States, there are over 13,000 taxing jurisdictions. EU VAT rules require charging the customer's local VAT rate. Getting it wrong leads to under-collection (a liability you must cover) or over-collection (refunds and customer complaints). All major platforms have built-in tax calculation or direct integrations with TaxJar and Avalara that handle this correctly without custom code.

When to Use This Skill

• When expanding sales to states or countries where you have tax nexus obligations
• When manual tax rates are causing compliance issues or needing constant updates
• When implementing EU VAT compliance (OSS/IOSS registration)
• When displaying accurate tax before the customer confirms payment

Core Instructions

Step 1: Understand nexus before configuring tax

You only need to collect tax in jurisdictions where you have nexus (a tax obligation).