This feature is particularly beneficial for marketplace platforms that are legally mandated to collect and remit sales taxes on behalf of their merchants.
Purpose
This feature empowers service providers — particularly those operating marketplace platforms — to manage and remit sales tax efficiently. It simplifies the complexities of tax collection by automating the withholding process directly within transactions, so platforms can meet their tax obligations without requiring merchants to handle remittance themselves.How It Works
Tax withholding and release is integrated into the Transaction API and eCheck services via Sale and Capture requests. Three parameters let you control withholding during a sale or capture, and release it during a refund.Parameters
Capture or Sale Operations
taxWithHold— Set totrueto activate tax withholding for a transaction. When enabled, the tax amount specified in thetaxAmountparameter is withheld from the merchant’s payout and passed to the service provider for remittance.
Refund Operations
taxWithHoldRelease— Set totrueduring a refund to indicate that the withheld tax amount should be released back to the merchant, aligned with the refund amount issued.taxAmountRelease— The specific amount of withheld tax to release back to the merchant for the associated transaction.
Practical Example
The following example illustrates how tax withholding flows through a $100 transaction.Transaction Details
Transaction Flow
1
Initial Purchase
A customer purchases an item for 10 tax component.
2
Fee Distribution
The total 2.50 going to Jupico and $2.50 going to the facilitator.
3
Tax Handling
With
taxWithHold set to true, the $10 designated for tax is withheld by Jupico and held for remittance by the service provider.4
Payout Allocation
The remaining funds are distributed to the appropriate parties after fees and tax are deducted.