Behind the Scenes - A Glimpse into Tax Calculations

Summary

As jurisdictions increasingly require marketplaces to collect and remit tax, Etsy describes the infrastructure it uses to calculate, record, and report taxes on transactions. When a buyer adds an item to a cart, Etsy sends a Quotation Request API call to Vertex, using buyer and seller locations, product category, tax rules, and mappings to determine the amount shown. At checkout and throughout fulfillment, DistributeTaxRequest SOAP calls carry order, cancellation, and refund details to Vertex, whose records support reporting and audit workflows imported into Etsy’s bigdata. The integration also required mapping Etsy taxonomy categories to Vertex rule drivers and separating quotation, distribution, and reporting workloads across multiple instances for horizontal scaling and load balancing. Shadow requests, ramped gradually without applying calculated taxes to carts, let the team simulate added Vertex load and monitor checkout performance before releasing traffic-increasing features.

Takeaways

1. 1

   Vertex receives quotation requests when items enter carts and distribution requests at checkout, with later calls covering cancellations and refunds.

2. 2

   Separating quotation, distribution, and report-generation workloads across Vertex instances removed interference and enabled horizontal scaling with load balancing.

3. 3

   Shadow requests simulate additional Vertex traffic without applying calculated taxes to buyers’ carts, allowing checkout performance to be monitored before release.