Sales and use tax collection on US orders

Why is Stannp collecting sales tax?

Stannp's physical expansion and economic growth have now created S&U tax collection obligations in most US states. Following the US Supreme Court's decision in South Dakota v. Wayfair, Inc. (June 21, 2018), states can require businesses to collect S&U tax based on where products and services are delivered or consumed, regardless of the seller's physical location.

Stannp’s business in the US is now of such a size that it has either economic or physical nexus in the majority of US states, requiring it to collect and remit S&U taxes on any applicable customer purchase.

What's being taxed?

Generally, all products and services sold by Stannp are potentially subject to S&U tax, including:

• SaaS subscription charges

• Direct mail pieces (both marketing and operational)

• Data processing services

• Prepaid inventory (custom envelopes, card affixes, etc.)

• Other service offerings

What's NOT taxed

• Balance top-ups: Prefunding your account does not incur S&U tax when the payment is made. Tax is only applied when mail is actually delivered.

• Non-US deliveries: Mail dispatched outside the United States will not incur US S&U tax.

How is S&U tax calculated?

S&U tax is calculated based on several factors:

Tax rates

• State tax rates typically range from 5-10%; 

• Tax is assessed at the zip code level, so rates vary by delivery location; 

• On average, you can expect tax to represent 1-2% of your total costs.

Calculation method

• We analyze the destination of every mail piece down to the district level; 

• Tax is calculated using third-party compliance software; 

• Processing time depends on volume (e.g., 100,000 records take approximately 3 minutes).

How tax applies to different products

Subscriptions and services

Taxed based on your billing address on file. 

Data processing 

Some states charge S&U tax on data services, calculated as we process your address data. 

Marketing mail 

Tax largely depends both on where individual mail pieces are delivered, as well as the contents of the mail. Stannp lists postage charges separately as a distinct line item on the invoice, as they may be exempt from S&U tax in many states. Tax treatment can vary by state. 

Operational mail 

Tax largely depends both on where individual mail pieces are delivered, as well as the contents of the mail. Stannp lists postage charges separately as a distinct line item on the invoice, as they may be exempt from S&U tax in many states. Tax treatment can vary by state. 

Prepaid inventory

Custom envelopes are taxable tangible personal property, with rates determined by the delivery address of each recipient. 

Actions you should take 

Stannp has implemented several features to help minimise your tax obligations: 

1. Declare your mail use type 

Many states directly exempt or allow exemption certificates for marketing, advertising and promotional mail. You must declare a mail use type for all mail sent to take advantage of these exemptions. 

2. Review your invoices 

Stannp's invoices separate postage costs from other charges. In states that exempt postage from S&U tax, this breakdown allows you to identify tax-exempt amounts. 

3. Submit exemption certificates (if applicable) 

If your organisation qualifies for a tax exemption, submit your certificate to avoid S&U tax charges. 

Tax exemptions 

Who qualifies? 

Organisations with valid exemption certificates include: 

• Tax-exempt entities (nonprofits, government agencies, etc.); 

• Businesses with resale certificates; 

• Organisations with S&U tax exemption certificates; 

• Entities with direct pay permits. 

How to submit your exemption certificate 

Email your exemption certificate to salestax@stannp.com and include your Stannp Account ID. 

Current process: 

Until our billing system is updated to automatically handle exemptions: 

1. Submit your exemption certificate; 

2. Our finance team will verify the certificate; 

3. Our sales team will issue a manual credit note for any taxes charged; 

4. Finance will process your refund. 

A self-service exemption certificate upload feature is coming soon. 

Non-US entities 

Subscriptions and services: If your primary billing address is outside the US, subscriptions, address verification, and premium support are not taxable. 

Direct mail: Due to the Wayfair decision, S&U tax on direct mail is based on where mail is delivered within the US, regardless of your billing address location. Non-US billing addresses do not automatically exempt you from US S&U tax on mail delivered to US recipients. 

Frequently asked questions 

When does this start? 

February 1, 2026. 

Will I be charged back taxes? 

No. This is forward-looking only. Stannp is covering historical tax obligations. 

Can you give me an estimate of my taxes before invoicing? 

We cannot legally provide proforma or estimated S&U tax amounts. However, you can estimate by identifying which states your mail will be delivered to and applying those state tax rates (minus postage and other exemptions where applicable). 

Why did my balance top-up receipt change? 

Because tax is based on actual usage, we can only create an invoice when mail is dispatched. A balance top-up is now treated as a credit receipt, not an invoice. 

How long does tax calculation take? 

Processing time depends on the size of your recipient list. For example, 100,000 records take approximately 3 minutes to process. 

Can Stannp advise me on my tax liabilities? 

No. Stannp cannot provide tax advice. Please consult a qualified tax professional for guidance specific to your situation. 

I have more questions. Who can I contact? 

Email us at salestax@stannp.com for assistance. 

Key legal reference 

This change is required following the U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc. (June 21, 2018), which allows states to require S&U tax collection based on economic presence rather than physical presence. 

Need help?

Contact our tax compliance team at salestax@stannp.com.