- Five-digit zip codes often cover multiple taxing jurisdictions, making it difficult to determine the correct sales tax rate with just that information.
- This can result in customers being charged a slightly lower or incorrect sales tax rate if their full address is not provided.
- To improve accuracy, sellers should collect full street addresses and 9-digit zip codes or use address validation tools.
- States in the Streamlined Sales Tax (SST) agreement provide resources to help sellers determine correct tax rates, reducing liability for zip code-based errors.
Source: taxjar.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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