If Twilio is determined to have sufficient presence (nexus - economic presence or substantial presence) in a state or locality, it is required to collect any applicable state sales & local taxes, telecommunication taxes, and other indirect taxes on the sale of its services based on the service address of the customer.
Notice: Twilio services consumption may be subject to state and/or local taxes in a number of areas. To see if Twilio collects taxes in your country, please see the Taxes section of our Support Help Center.
Table of Contents
- In Which US States does Twilio Charge Taxes?
- Why am I being charged two different types of taxes?
- Can I get an estimate of what my taxes will be?
- How does Twilio know how much to charge?
- How will I know how much I owe in taxes each month?
- How does this affect my balance?
- What if my business is a reseller or is tax exempt?
- Sales & telecommunication taxes
- Telecommunication fees & taxes
In Which US States does Twilio Charge Taxes?
Per state tax laws, Twilio is only liable to charge sales and/or telecommunication taxes for states in which we have a “physical or economic 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 Carolina
- South Dakota
- West Virginia
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 telecommunication taxes due to our wide array of unique product offerings. Please reference the section below on sales & telecommunication 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 state and local tax laws. Twilio routes all usage through this business to calculate taxes for which you will be charged. Twilio uses the service/billing address that you have provided to us for tax calculation purposes. Tax will be calculated based on your service address. If there is no service address provided, the tax will be calculated on the billing address. Users can update their service address in Twilio Console.
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 Usage Summary page in Console (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 set up 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 monitor your balance for an increase on the first day of the month.
Please keep in mind that your project will be suspended 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 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. If the certificate(s) applies to multiple accounts, please provide all Account SIDs affected along with certificate(s). 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 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 be exempt from 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, LA) may treat these taxes differently.It is not applied against federal taxes.
Sales & telecommunication taxes
What are sales & telecommunication taxes?
- Simply put, sales & telecommunication 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 & telecommunication taxes determined?
- The Address Where Twilio Services Are Consumed: Sales and telecommunication taxes for Twilio’s products are dependent on where you consume our products, which is determined by your "service address". Twilio uses your service address, or billing address if no service address is specified, to calculate taxes. If your billing address is not where you consume Twilio’s products, please update your service address in Console.
- 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?
Twilio services may be subject to VAT/GST or similar taxes in a number of jurisdictions outside of the United States. To see if Twilio collects taxes in your country, please see the Taxes section of our Support Help Center.
As a quick double check, make sure to update your service address in Console with the physical address where you consume Twilio’s services. This helps to make sure taxes are assessed properly.
Telecommunication fees & taxes
Universal Service Fund (USF)
The Universal Service Fund (USF) is an FCC-mandated fee that is applied to some of Twilio's telecom and/or VoIP services. For full details, see Universal Service Fund (USF) Overview.