Taxing jurisdictions, Geo Codes, and location codes
An address usually belongs to several taxing jurisdictions: a country, a state or province, a county, a city, and a district jurisdiction. In Global Tax Determination (GTD), a Geo Code represents a unique combination of these jurisdictions. Since location is one of the defining factors of tax determination, Geo Codes play a huge role in assigning the correct tax rate.
Taxing jurisdiction limits aren’t always the same as county or city limits, so it's important to provide complete addresses with street numbers and ZIP codes that include the 4-digit extensions. To ensure accurate addresses, we recommend using an address quality tool. If an address is inaccurate or incomplete, it may result in an inaccurate tax calculation.
You may also come across location codes, which you can create for both your organization and your customers or vendors. You can assign location codes to specific addresses to save time during the tax calculation process, as you can just enter the location code instead of typing the full street address. You also have the option to link a location code to the Geo Code assigned to that address.
Understanding Geo Codes
Geo Codes list taxing jurisdictions in order from broadest to narrowest.
Not all jurisdictions have tax rates. If a location (state, county, city, or district) has no tax, GTD S1 leaves that field blank, while GTD legacy marks it with empty brackets []. In the following examples from GTD S1 and legacy, Geo Code 6276 has no county tax.
Selecting Geo Codes in Global Tax Determination
When you enter an address, you can either choose a Geo Code or let GTD choose the Geo Code for you:
- If you enter the address and click Get Geo Codes, GTD will give you a list of codes that map to the address you entered. You can then select which Geo Code you want GTD to use when calculating tax.
- If you enter the address and do not click Get Geo Codes, GTD will use the most appropriate Geo Code when calculating tax.
Selecting a Geo Code is not required. Unless you're certain of which Geo Code to use with the address, we recommend that you let GTD choose the Geo Code.
What if I disagree with the tax rate in Global Tax Determination?
If the tax rate provided by Global Tax Determination isn’t what you were expecting, check the underlying Geo Code in the Tax Calculator to make sure that the associated jurisdictions are correct.