Taxation - and tax compliance - can be a confusing and time-intensive but necessary burden for any accounting/finance team, regardless of the size of the organization.

Often, the task of taxation is left to companies outside of the organization that are familiar with all of the tax rates associated with the countries, states or provinces, counties, and cities and towns.


Tax regulations vary greatly by jurisdiction, country, industry, and service type. Successful organizations often build revenues on more than one product or service offering and in more than one region/tax jurisdiction. Bundled products, each potentially with unique tax regulations, can be difficult for tax managers to account for in a subscription revenue model. Companies unable to apply taxes appropriately risk revenue leakage and regulatory scrutiny.

Savvy tax engines enable companies to calculate tax for customers and services, which can be presented clearly and accurately on a customer statement.

Such offerings can be packaged inside the billing engine or provided by a third party that utilizes API integration to pass customer and tax information quickly and securely from one system to another. Some companies use a mix of tax services and the basic tax calculations available in CPQ and Billing platforms. Ideally, tax calculation would be an integrated component in all transactions. To achieve the best taxation function, it is critical to collect requirements for tax at the beginning of a CPQ project.

Key Taxation Terminology


The contact defined by a tax authority that is required between a seller and a state to trigger a requirement for the seller to register, and then collect and remit sales tax in the state.

Tax Code

Can also be known as a “goods and services type” is a code that determines the taxability of your products and services. For example, a tax code exists for “Restaurant industry – bar supplies” as well as “Advertising - public relations” and thousands upon thousands of other products and services. 

Legal Entity

A company (or organization) with taxation responsibilities, such as tax filings, created under one of a variety of options for structuring corporations (Sole proprietorship, C Corp, etc.) Legal entities can be known by many different terms, for example, named differently in various vendors’ systems. An example of this could be ATG US vs. ATG Canada vs. ATG London.

Tangible Personal Property

Property that can be moved or touched, for example, inventory and business equipment. It is important to understand how the state defines TPP and IPP.

Intangible Personal Property

Non-physical/intangible inventory such as stocks, bonds, or intellectual property. It is important to understand how the state defines TPP and IPP.

Estimated Tax vs. Actual Tax

Estimated tax is typically calculated to appear on the Quote, while Actual tax during the time of sale and is presented on the Invoice.

Exemption Certificate

When a jurisdiction’s rules allow for a sale to be tax-exempt, this certificate validates the tax-exempt purchase to the seller. 

Notice & Reporting Requirements

Require out-of-state sellers that are not currently collecting and remitting applicable taxes to report sales information for tax purposes to the state (through registration for a sales/use tax permit in that state) or to the consumer (each one... and to provide a list of your customers to the state). 


Sending the tax collected from the customer to the appropriate party with a local or federal tax authority. 

Taxation Components


Rate Calculation

Determining the correct tax rate is a challenge, as taxability and rates can differ across a multitude of factors such as, tax nexus, which is determined by customer, vendor, distributor locations, and even server location (could be international or domestic), software versus services, including recurring/subscription selling models for tangible and intangible personal property, transactions taxable in separate locations based on the sourcing or method of delivery, and sales tax holidays or tax-exempt transactions.

Over time, there will be several factors that are likely to add additional complexity to calculating your business’ tax obligations. Rules and regulations are regularly subject to change and as the business expands, higher volumes will need to be accommodated with speed and scale.

Estimated tax can be calculated and provided during quoting or ordering, while actual tax will be available upon invoicing. This is just another effect of the frequency of changes in tax rates.

Tax engines will require data points such as product tax code and account shipping address (or other relevant tax calculation address), legal entity, etc. to correctly calculated tax obligations and amounts. Based on the system’s configuration options, these attributes can usually be used to create tax treatments and rules for standardization.

File & Remit

Companies are required to register to file and remit tax with a local or federal tax authority where they have nexus. The responsibility to file, and to determine where to file, lies with the business. Businesses must also plan for a variety of filing schedules based on jurisdiction or holidays, and different jurisdictions will have variations in their methods for filing.

Certificate Management

If certificates expire it may result in the business being liable for paying an uncollected tax as they would be unable to prove tax was not due on a particular sale. An organization must monitor the renewal periods of their exemption certificates and implement a process to mitigate this risk.

There are different types of exempt organizations, and under a state’s statutes, different purchasers may and may not be exempt. Common examples of exemptions are:

  • The federal government (states are prohibited from taxing direct sales)
  • State/local governments and government contractors
  • Non-profits (including hospitals) and charitable organizations
  • Schools, churches, PTAs

Certificate Management

If certificates expire it may result in the business being liable for paying an uncollected What triggers a tax nexus for your business? It is advisable to assess your business’ risk of owing taxes well in advance to manage compliance. Particularly for businesses utilizing recurring billing, there is a repeated source of sales tax risk associated.

A Closer Look at the People, Process, and Technology of Taxation


The Taxation domain is primarily owned by the Finance organization.


ATG maintains a set of 100 key business processes to support the management of customers and revenue for service providers. Twenty-eight of these processes originate or are impacted by the Taxation domain functions. Below are the key processes that are touched in Taxation, categorized by the organizational unit that owns the process:

Finance Organization

Tax Processing & Filing are methods used to streamline complicated taxation rules and regulations, including the accurate filing of corporate income and sales tax information.

Bill Day Usage Processing is the process of invoicing usage that has been accumulating since the previous statement/invoice period. Bill day usage processing includes calculation of charges, potential overage, decrementing credit balances, and managing rollover and pooled usage constructs.

Bill Run Operations are the tasks and functions associated with initiating and maintaining the billing process, including bill cycle management, usage file management, payment batches, credit card rejects, etc.

Financial Statement Preparation is the production of accurate, auditable, and presentable financial statements in the most efficient manner possible.

SOX/Regulatory Compliance is the ability to provide proof of internal controls to prevent fraud and material misstatements.

Currency Conversation is the point within a multinational company's sales cycle where currency is converted. This conversion may occur at the transaction or during the commissioning process and must be carefully monitored to ensure accurate conversion rate and payment amount and to enable standardized reporting. 

Actual Tax Calculation refers to the calculating of the actual tax to charge the customer, at the time of invoice.

Exception Certificate Management entails the methods of managing registration, storage, and renewal of all applicable exemption certificates, preventing the company from paying taxes where they aren’t owed.

Tax Determination is the method to define how tax will be applied and where for each entity. 

Update Tax Rates refers to updates to tax rates with regulation changes at local and federal levels.

Assign Nexus is the process of determining the contact required between a seller and a tax authority has occurred, assigning the appropriate jurisdiction or nexus for taxation regulation.

Tax Filing & Remittance are the methods used to track filing requirements, complete filings and remit taxes to the appropriate tax authority as determined by nexus.

Jurisdiction Registration is the process of registering for the identified tax authority as determined by nexus.

Customer Service Organization

Ongoing Up-Sell Processing is the primary method for increasing Average Revenue per User and is the process of moving a customer to a better product or service at some point during their relationship with your company.

Ongoing Cross-Sell Processing is the primary method for increasing Average Revenue per User and is the process of moving a customer to a similar, additional product or service at some point during their relationship with your company.

Renewal Processing are the methods used to renew customers’ services, manual or automated.

Order Entry is the process of creating a new service for a customer including capturing the necessary information to provision and bill for the service effectively.

I.T. Organization

Estimated Tax Calculation refers to the calculating of the estimated tax during the sales cycle, typically during quoting.

Up-Sell Processing (Initial Order) is the process of selling a customer a better product or service from what they had originally expressed interest in during the needs assessment.

Cross-Sell Processing (Initial Order) is the process of selling a customer a separate product or service from what they had originally expressed interest in during the needs assessment.

Sales Organization

Management and Oversight of Monetization Ecosystem - is a process used to ensure that all touchpoints and connections in the ecosystem are optimized and working to their full potential.

Vendor Management of Monetization Ecosystem – refers to the management of ecosystem component vendors including the proactive communication of changes, and general relationship nurturing.

Monitoring and Testing of Vendor Functional Releases is a process where, as ecosystem components release updates and patches, each is checked and tested to confirm all systems are working together as required by the business.

Cross-Training of Monetization Ecosystem Components is the process for training organizational resources.

Security Oversight of Monetization Ecosystem is a process for maintaining and controlling access and permission to the ecosystem components.

Data Stewardship of Monetization Ecosystem – is the process of assigning ownership and sources of truth for data within the organization.

Operations Organization

Order Management / Orchestration are the business processes related to customer orders for products or services. Typically important when there are complex products and services that span multiple provisioning and fulfillment options. Bundling of disparate products, or bundling of products and services (like Professional Services, training, etc.) can add to the need for Order Management.

All Organizations

Daily, Periodic or Ad Hoc Reporting (ETL, Dashboard) refers to the movement of data between domains to create a single source of truth for reporting and dashboarding.


The solutions found in the Taxation domain consist of internal, OOTB, or custom tax engines (such as in Salesforce Billing), and third-party tax engines with integrations. Prebuilt integration to these tax services with your quoting and billing systems is a critical consideration. Custom integrations are costly and negatively impact timelines and risk. Prebuilt integrations also bring benefits like access to a supported database of millions of tax rates and rules.

Key Taxation Vendors



Founded: 1979
HQ: New York, NY
Company Type: Public
Delivery Method: Cloud


Chase Paymentech is a web-based merchant service allowing retailers to accept payments in store, online, or on the go. Paymentech also provides web-based access to transaction data, advanced web-based reporting, an online chargeback interface, and optional fraud management tools.


This offering allows the user to:

  • Reconcile payment operations using daily, weekly, or monthly financial reports
  • Manage chargeback online with 24/7 access to comprehensive transaction data
  • Reduce errors resulting in chargebacks
  • Control employee access to customer and business-related information
  • Create customized fraud filters to manage risk

Paymentech screens for high-risk transactions, electronically captures, stores, and exchanges chargeback documents, and provides direct contact numbers for card issuing banks.


Chase Paymentech tends to target companies of all sizes, including enterprises, which are in need of data management tools.


  • Valley Ranch Pet Clinic
  • David Mayhew Photography
  • Skin Sanctuary
  • Irina's Alteractions


Founded: 1994
HQ: Foster City, CA
Company Type: Privately Held
Delivery Method: Cloud


CyberSource is a Visa, Inc. company providing an e-commerce credit card payment gateway. This company works with over 400,000 medium-to-large sized merchants worldwide to process online payments while utilizing fraud and security management.


Featured solutions include:

  • Global Expansion
  • Mobile and Cross-Channel Payments
  • Streamlining PCI Management
  • Optimizing Fraud Management

CyberSource also provides implementation and maintenance support, as well as merchant and partner payment management solutions.


CyberSource tends to target enterprise companies such as manufacturers, service businesses, and education and e-government entities, as well as medium-sized businesses.


  • Traveloka
  • LINE Thailand
  • China Eastern
  • Qunar
  • Television Broadcasts Limited (TVB)


Founded: 1981
HQ: Newcastle, UK
Company Type: Public
Delivery Method: Cloud


Sage Payment Solutions is a payment solutions and payment processing company allowing customers to pay via debit/credit card, electronic check and ACH, gift card, and mobile processing.


Additional processing solutions include:

  • Payment Card Industry (PCI) certification, merchant validation/certification, and PIN transaction security
  • Electronic entry of one-time or recurring payments through a virtual terminal
  • Processing and depositing of business and consumer checks at Point-of-Sale
  • Design and customization of pre-designed gift and loyalty cards

Sage Payment Solutions also enables integration with accounting and ERP software, while providing service and support for loss prevention and charge back assistance, underwriting, and more.


Sage Payment Solutions tends to target small to medium sized businesses of every industry, from retail to healthcare.


  • VGloryBee
  • Power Distributing
  • Merit Electric
  • Tanamera Construction
  • Harpoon Brewery


Founded: 1971
HQ: Symmes Township, OH
Company Type: Public
Delivery Method: Cloud


Vantiv acquired privately held Litle & Co. in December 2012. Vantiv is comprehensive in-store and online solution for merchants and financial institutions of all sizes. In-store technologies range from stand-alone devices to integrated POS solutions for credit cards, mobile payments, and ACH and checks. Online capabilities include credit, debit, and prepaid card acceptance as well as international payments.


Vantiv has features that include:

  • Fraudulent and card data protection
  • Payment security threat protection
  • Current and historical reporting insights
  • Customer and technical support
  • Integrated payment processing

Vantiv provides application, contract, underwriting, and provisioning solutions, chargeback analysis and reporting, and at-risk merchant monitoring and support. Additional services include gift and prepaid cards processing, and merchant financing.


Vantiv tends to target enterprise merchants, financial institutions, government entities, and payment facilitators, as well as small-sized businesses in retail, restaurant, and service industries.


  • Rabobank N.A.
  • USPS
  • Ingenico Group
  • Centier Bank

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