If, per Nexus determination, Twilio is determined to have a physical presence in a state or locality, and it directly sells services to someone located in that state or locality, then Twilio is required to collect Sales and/or Indirect Taxes on behalf of that state.
In Which US States does Twilio Charge Taxes?
Per state tax laws, Twilio is only liable to charge Sales and/or Indirect Taxes for states in which we have a “physical presence” as determined by the applicable state nexus rules. Twilio will be collecting taxes for the following states:
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Dakota
- West Virginia
|Charging as of December 1, 2018 for November Usage||South Carolina|
|Charging in 2019||Alaska|
|Charging in 2019||Delaware|
|Charging in 2019||Idaho|
|Charging in 2019||Vermont|
|Charging as of February 1, 2018 for January Usage||California|
|Charging as of November 1, 2018 for October Usage||Arkansas|
|Charging as of November 1, 2018 for October Usage||Hawaii|
|Charging as of November 1, 2018 for October Usage||Iowa|
|Charging as of November 1, 2018 for October Usage||Kansas|
|Charging as of November 1, 2018 for October Usage||Kentucky|
|Charging as of November 1, 2018 for October Usage||Louisiana|
|Charging as of November 1, 2018 for October Usage||Maine|
|Charging as of November 1, 2018 for October Usage||Mississippi|
|Charging as of November 1, 2018 for October Usage||Montana|
|Charging as of November 1, 2018 for October Usage||Nebraska|
|Charging as of November 1, 2018 for October Usage||New Mexico|
|Charging as of November 1, 2018 for October Usage||North Dakota|
|Charging as of November 1, 2018 for October Usage||Oklahoma|
|Charging as of November 1, 2018 for October Usage||Rhode Island|
|Charging as of November 1, 2018 for October Usage||South Dakota|
|Charging as of November 1, 2018 for October Usage||Utah|
|Charging as of November 1, 2018 for October Usage||West Virginia|
|Charging as of November 1, 2018 for October Usage||Wisconsin|
|Charging as of November 1, 2018 for October Usage||Wyoming|
Why am I being charged two different types of taxes?
Similar to paying tax in a store or property taxes on a home, our products are subject to Sales and/or Indirect Taxes due to our wide array of unique product offerings. Please reference the section below on Sales & Indirect Taxes for more details regarding what factors determine the tax.
Can I get an estimate of what my taxes will be?
Unfortunately, there is no way to provide an accurate estimate in advance. The taxes assessed on the Twilio products you are using could change monthly depending on varying reasons such as where you consume our services or state/local tax laws changing.
We will be providing a detailed breakout of your taxes via an invoice after taxes are assessed each month. The detailed breakout will show the taxes you are paying by jurisdiction and product so that you can have a better idea of what usage is driving the taxes.
How does Twilio know how much to charge?
Tax laws are regularly changing so we have chosen to work with a third party tax business that focuses solely on local and state tax laws. Twilio routes all usage through this business to calculate taxes for which you will be charged.
How will I know how much I owe in taxes each month?
When we begin assessing taxes, you will see tax line items in the Console Usage > Summary page (see example below). Taxes for the previous month are assessed on the first day of the following month.
How does this affect my balance?
If you currently add money, via credit card, to your balance to draw down from, you may want to take a look at the automatic recharge trigger you have setup on your project. Since we will be adding an additional charge for assessed sales taxes on the first day of the month following the month of taxed usage, you may need to adjust your recharge trigger accordingly. This also applies to manually triggered payments. You will need to pay attention to your balance for an increase on the first day of the month.
Please keep in mind that your project will suspend when your balance reaches zero. It will only be updated to an active state when your project has been funded back to a positive balance to draw down from.
What if my business is a reseller or is tax exempt?
If you or your business is a reseller, 501(c)3 organization or is in possession of a state specific tax exemption certificate(s) please email a copy of the certificate(s) to firstname.lastname@example.org along with your Account SID. Once your certificate(s) is received, our third party exemption company will verify your certificate(s) and update your project accordingly. Please note that even if you have a resellers or exemption certificate you may not be exempt from all taxes in every jurisdiction. Please review the below guidelines regarding resellers and exemption certificates.
Certificates for State Level Taxes
- In order for you or your business to be exempt from taxes, you will need to provide Twilio with a reseller certificate from each state you would like to claim tax exemption status in. You will need to provide us with a state issued certificate specific to being a reseller of telecommunication services in order to be exempt from telecommunication taxes in an individual state.
California certificate available for download here
Note: reseller certificates only cover SaaS-based taxes at the state level. The certificate does not exempt you from state level telecommunication taxes (which are a part of indirect taxes).
- An IRS 501(c)3 letter does not constitute an exemption certificate for state and local purposes.
Certificates for Federal Level Taxes
- SaaS services are not taxed at the federal level.
- In order to not be assessed telecommunication-based taxes at the federal level you must provide us with a certificate that proves you are a federally registered reseller.
Federal Tax Types
- Federal Universal Services Fund Fee: To be exempt, you must be registered with the FCC and be a “Direct Contributor” to the Federal Universal Services Fund.
- Telecommunication Relay Service Charge (TRS) - Federal Cost Recovery Charge: To be exempt, you must be a “Direct Contributor” to the Universal Services Fund.
- Federal Excise Tax: Twilio will not be charging you this tax so no exemption certificate is needed.
- An exemption certificate is only valid for the state it is issued from. You will need to provide an exemption certificate for each state you or your business wishes to claim exemption status in.
- An exemption certificate is only exempt from SaaS taxes, not telecommunication taxes.
- An exemption certificate only exempts you from state and local level taxes – home rule states (AL, AK, AZ, CO, IL, LA) may treat these taxes differently.It is not applied against federal taxes.
Sales & Indirect Taxes
What are Sales & Indirect Taxes?
- Simply put, Sales & Indirect Taxes are both taxes charged on the sale of a product or service. These taxes may be assessed at the State, County and Municipal jurisdictional levels. Each jurisdiction will categorize Twilio's products differently, and these jurisdictions will have different regulations on what products and services are subject to sales and/or indirect tax.
How are Sales & Indirect taxes determined?
- The Address Where Twilio Services Are Consumed: Sales and indirect taxes for Twilio’s products are dependent on where you consume our products, which is determined by your ‘service address’. Twilio uses the billing address that you have provided to us as your service address. So, if your billing address is not where you consume Twilio’s products, you can update your service address in the console by doing the following:
- Select Billing from the drop down menu in the top right corner of your console
- On the top menu bar of the billing page select the Payment History page
- Select the Company Info button and enter your "service address"
- Purchase Type: Each state has its own method to determine whether taxes are owed for purchasable goods and/or services and at what rate.
What if I consume the majority of my usage outside of the United States?
If you consume Twilio services outside of the US, you are not subject to SaaS taxes.
As a quick double check, make sure to update your service address in the billing section of your customer portal with the address where you consume Twilio’s services to make sure taxes are assessed properly.