City Aliases and Sales Tax Jurisdictions
In some areas, neighborhoods may be called by a different name from what you’ll find on the map. It can be the name of a large subdivision or planned community within a larger city or a historic name of an area that was annexed into a larger town or city. It’s not uncommon for mail to be addressed to a location that isn’t actually the proper legal name of the location — yet it is accepted and delivered by the US Post Office. Why? Because the Post Office uses what are called city aliases. This can cause a problem for sales tax calculations. Many towns share the same street names, like First Avenue and Second Street, and often have many of the same addresses.
A letter addressed to “123 Main” won’t get far without the name of the town and the zip code. When a smaller town is incorporated into a larger one, both the smaller town and the larger one might have a 123 Main. Instead of changing street names, the Post Office delivers mail based on the old name of the annexed area — its alias. This alias, however, tells us nothing about the tax jurisdiction now that the address is part of a new tax jurisdiction. Take, for instance, the zip code for Great Barrington, Massachusetts: 01230. If you search cities by zip code on the USPS website, you’ll see there are a large number of city names accepted for mail deliveries. The zip code also includes other towns, like Egremont, under the acceptable list of names that fall into the zip code. Unacceptable names, like Berkshire Heights, are actually subdivisions that are also contained inside the zip code.
While the USPS will still deliver mail with Berkshire Heights and 01230 addressed on it, it can get confusing for sales tax because Berkshire Heights wouldn’t have its own sales tax jurisdiction. Egremont could have a different sales tax rate than Great Barrington. As it happens, there is only one sales tax rate in Massachusetts right now, but that can change at any time. Your customer address information must have the correct information for tax jurisdictions. Zip codes alone aren’t enough information for calculating the correct sales tax rate. If you’re not checking your addresses and verifying their accuracy, you’re leaving your business open to sales tax liabilities. Sales Tax DataLINK verifies addresses with a touch of a button, so you don’t have to be on the watch. Sign up for a free evaluation to see how your company can use this technology.