If you’re aware of an upcoming tax rate change, follow these steps for First-of-Month and Anniversary billing. As a reminder, it is your obligation to ensure your compliance with all applicable laws and regulations.

First-of-Month Billing

• The night before invoices are generated for your new tax rate, temporarily set the new rent tax rate in your software settings. For example, if your state tax rate is changing on August 1st, and your August invoice is generated 15 days before the due date, you should do this on July 16th.
• After your Invoices are generated for the new tax rate, restore the original tax rate for the remainder of the month with the previous tax rate. This ensures that new move-ins and payments made before the new tax rate takes effect are charged the current tax rate.
• At the close of business before the effective date of the new tax rate, update the tax rate again. This allows future rent billings to be billed the new tax rate on the effective date.* 
  *Disclaimer: Any rent invoice generated, including those from online move-ins, processed between the time you change the rate and 12:00 am on the effective date of the tax rate change, will be billed at the new tax rate.

Anniversary Billing

Unlike First of Month billing, Anniversary billing is based on the first day of the month a tenant moves in. As a result, invoices could be generated on any day of the month.

• Allow invoices to generate with the previous tax rate applied and issue credits or add fees afterward to refund or apply any tax payments that need to be adjusted.
  
  When deciding on your approach, keep in mind that adding a tax charge (and being able to collect the tax from your tenant) after the fact may not be possible via your software if the tenant has already moved out or is no longer listed in the system.
  
  Please note: Credits or added fees for tax amounts will not appear in the Sales Tax Collected report. Manual adjustments in your accounting system may be required.