To change automatic taxability status update settings in the EXEMPTAX Stripe app, you'll need to access the app's settings in your Stripe dashboard. Once you do so you will be brought to the following screen:
As seen above, the EXEMPTAX Stripe App has three (3) possible settings when it comes to automatically updating the taxability status of your customers based on your desired business process.
An explanation of the three options is provided below:
Option 1. Do not update
If this option is selected, EXEMPTAX will not automatically update the taxability status of your customers inside of Stripe. This means that any action or changes to a customer's exemption status inside of EXEMPTAX including approved, rejected and expired tax exemption documents will be confined to EXEMPTAX, and any taxability changes you wish to make for billing customers with or without sales tax will need to be manually handled in Stripe.
Option 2. Exempt with pending certificate
If this option is selected, EXEMPTAX will automatically update the taxability status of your customers in Stripe to tax exempt as soon as a pending (waiting review) exemption document is associated with a particular customer inside of EXEMPTAX.
This setting is preferred to optimize sales conversion, as tax exempt customers can immediately be billed in Stripe without being charged sales tax, and will not have to wait for the completion of their exemption document review. The advantage of this approach is that it's customer friendly, and assumes that errors in exemption documentation should be rare and can be corrected through offline after sales support, ultimately making the process more convenient and expedient for the majority of your tax exempt customers.
The disadvantage of this approach is that there may be a particular edge case scenarios where customers may not provide valid tax exemption documents even with after sales support, and are able to transact without sales tax during the transition period of their document review. Such edge cases may require additional costs and manual efforts to remediate.
Option 3. Exempt with active certificate
If this option is selected, EXEMPTAX will automatically update the taxability status of your customers in Stripe to tax exempt as soon the tax exemption document that is associated the customer record is approved in EXEMPTAX.
The advantage of this approach is that edge cases involving tax exempt transactions without valid sales tax exemption documentation can be avoided.
The disadvantage of this option is that since tax exemption documentation reviews can require human review, customer billing for all tax exempt customers would be delayed. Depending on your industry and business processes, such a delay can additional friction to sales conversion, whereas a certain rate of edge case exemption issues may be preferable to inconveniencing and slowing down billing for all tax exempt customers.
Notice - Irreversible Changes!
Regardless of which option you choose above, it's important to note once a selection is made and you hit the save changes button, such changes will begin to take effect immediately. If Option 2 or Option 3 are chosen, EXEMPTAX will automatically begin to update the taxability status of your customers in Stripe based on your desired configuration. This means that any manual customer taxability overrides in Stripe if any will be overwritten, and EXEMPTAX will be the leading system to update the taxability status of your customers in Stripe.