How Taxwire Calculates Tax in Maxio

After setup is complete, Maxio uses Taxwire in the background to calculate sales tax for eligible taxable charges. Learn what Maxio sends to Taxwire and how tax appears in Maxio.

Important: Taxwire tax calculation depends on a complete Maxio tax origin address, a usable customer destination address, taxable products or components, and valid Taxwire credentials.

How calculation works

When a taxable charge is previewed or billed, Maxio builds a Taxwire tax request using your site origin address, the customer's selected destination address, and each taxable line item's amount, discount, and product tax code. Taxwire returns the amount to collect and jurisdiction details. Maxio then creates tax line items on the invoice.

Calculation stages

Tax calculation happens across catalog setup, customer setup, previews, invoice generation, and post-billing actions. Each stage depends on accurate tax data from Maxio and valid calculation results from Taxwire.

1. Catalog setup: You maintain products and components in Maxio. If a Taxwire product category is present on a taxable product or component, Maxio sends it as the product tax code for the line item. Otherwise, Maxio sends the general services category.
2. Customer and subscription setup: Customer shipping and billing addresses are captured in Maxio. Your tax address option determines which address is sent to Taxwire.
3. Tax calculation: During previews and invoice generation, Maxio sends Taxwire the origin address, destination address, and each taxable line item's amount, discount, and product tax code.
4. Invoice enrichment: Maxio records Taxwire tax amounts as tax line items and stores available jurisdiction breakdowns for invoice tax display.
5. Post-billing actions: For invoice-centric billing sites, invoice, void, and refund events enqueue background jobs that export corresponding transaction activity to Taxwire.

What Maxio sends to Taxwire

Maxio sends Taxwire the transaction and address details needed to calculate tax. The request can include origin, destination, tax ID, customer, and line item information.

For tax calculation, Maxio can send Taxwire the following details:

• Origin address fields, including country, postal code, state, city, and street.
• Destination address fields, including country, postal code, state, city, and street.
• The customer's tax ID, when a VAT number or similar tax ID is on file.
• The Maxio customer ID, so Taxwire can apply exemptions stored for that customer.
• Each taxable line item's amount and product tax code, when available.
• Any discount on a line item, as a separate amount. Taxwire applies the discount itself rather than receiving an already-discounted price.

Preview and invoice behavior

Maxio requests a tax calculation from Taxwire during previews and billing, then records a finalized transaction in Taxwire after the invoice is issued. This helps the tax shown during preview match the tax recorded on the invoice.

• Previews: When a user previews an upcoming charge, Maxio calls Taxwire for a tax calculation so the preview reflects real-time tax.
• Invoice creation: When an invoice is issued, Maxio creates a finalized transaction in Taxwire in the background, persisting the tax record for reporting and filing.
• Failures: If a Taxwire call fails, such as from an invalid product code or credential issue, Maxio logs the error and surfaces the setup or configuration issue in the UI rather than billing an incorrect amount. If the origin address or the customer's address is incomplete, Maxio doesn't call Taxwire and no tax is calculated.

Tax-inclusive pricing

For a tax-inclusive charge, Maxio extracts the tax from the gross price instead of adding tax on top of it. Taxwire has no tax-inclusive setting, so Maxio sends the full price and uses the combined tax rate Taxwire returns to work out how much of that price is tax.

A subscription can mix tax-inclusive and tax-exclusive charges in the same billing period. Maxio calculates each type correctly and combines the results on the invoice.

Tax display in Maxio

When Taxwire returns tax to collect, Maxio creates a tax charge named with the tax type Taxwire returns, such as TEXAS SALES TAX (8.25%), where the percentage is the combined rate across all jurisdictions that applied. If an invoice's taxable charges fall under different rates, Maxio creates a separate tax charge for each rate. Maxio also stores a breakdown for each jurisdiction Taxwire returns for invoice tax presentation.