Tax Compliance Engine

Part of the worlds-biggest-software-project initiative.

An open-source, AI-native sales tax compliance engine for multi-jurisdiction calculation, nexus monitoring, and filing automation.

Tax Compliance Engine is a developer-first platform for businesses that must collect, report, and remit sales tax, VAT, and GST across thousands of jurisdictions. It targets e-commerce operators, SaaS companies, and enterprise tax teams currently locked into expensive, opaque commercial suites. The project addresses the absence of a viable open-source alternative in a regulatory space dominated by proprietary vendors.

Why Tax Compliance Engine?

No viable open-source alternative exists. Existing OSS projects (OpenTaxSolver, UsTaxes) cover personal income tax only; no community-maintained engine handles business multi-jurisdiction sales tax.
Incumbent pricing is opaque and steep. Avalara's median customer pays ~$19,356/year, Vertex runs $60K–$200K+/year, and ONESOURCE reaches $300K+ at the enterprise tier — pricing complaints are a recurring theme in customer reviews.
Percentage-of-revenue pricing punishes growth. Anrok charges $499–$1,000/month plus ~0.4% of revenue, which compounds painfully at scale.
Digital goods classification lags legislation. Static lookup tables at incumbent vendors struggle with SaaS, AI services, bundled offerings, and emerging digital categories.
Switching costs are high by design. Deep ERP integrations, multi-year auto-renewing contracts, and 6–12 month implementation timelines lock buyers in.

Key Features

Calculation & Jurisdiction Coverage

Tax rate calculation across US state, county, city, and special-district jurisdictions (12,000+)
Product taxability mapping via a configurable taxonomy spanning physical goods, SaaS, digital services, and professional services
International VAT/GST calculation for major markets including EU VAT OSS, UK VAT, Australia GST, and Canada GST/HST
Idempotent calculation API with per-transaction line-item explainability
Multi-entity support for organisations with multiple legal entities across jurisdictions

Nexus Monitoring & Registration

Economic nexus threshold tracking with configurable alerting per jurisdiction
Physical nexus monitoring via HRIS integration to detect remote-employee-triggered nexus
Webhook-driven alerts on threshold approach and crossing events
Workflow triggers to drive registration once a nexus event is detected

Filing, Remittance & Exemptions

Automated returns preparation with jurisdiction-specific formatting
Filing and remittance execution for registered jurisdictions
Exemption certificate collection, storage, validation, and expiry tracking (SSUTA-compliant)
Audit log capturing every rate applied, with calculation rationale per transaction

Developer Experience & Integration

REST API exposing Products, Customers, Transactions, and Calculations as structured resources
SDKs for major programming languages
Webhook notifications for nexus alerts and filing confirmation events
Designed for embedding in billing, e-commerce, and ERP stacks rather than admin-console-only workflows

AI-Native Advantage

LLM-based product taxability classification can dramatically outperform the static lookup tables used by every incumbent for ambiguous digital goods, bundled offerings, and SaaS edge cases. Continuous legislative monitoring across 12,000+ jurisdictions can auto-propose rule and rate updates before they take effect, replacing slow human research cycles. AI-driven audit defence assembles jurisdiction-specific evidence packages — exemption certificates, calculation rationale, and supporting documentation — that today require manual compilation. Anomaly detection on returns flags statistical outliers before submission, reducing audit exposure.

Tech Stack & Deployment

The architecture targets self-hosted, cloud, and hybrid deployment with a developer-first REST API as the primary integration surface. The calculation layer (rate lookup, product mapping, jurisdiction routing) is suitable for an open-source core; rule-table maintenance can be crowdsourced from the community, with a commercial hosted service offering managed rate updates and filing. Streamlined Sales Tax (SST) Certified Service Provider certification is a target milestone, enabling free filing in 24 SST member states. Compliance with EU VAT OSS, DAC7, and GDPR data-residency requirements is addressed by design.

Demo Data

target/scripts/seed-demo.mjs loads a realistic sample dataset (customers, products, exemption certificates, committed + voided transactions across several states, nexus registrations with a filing calendar, draft and filed returns, webhook subscriptions) on top of the base reference seed, so every screen looks populated for demos, screenshots, and video recordings. It is idempotent — a prior demo load is detected (DEMO-* external ids) and the run is a no-op — and the whole load runs in one transaction, so a failed run leaves nothing behind.

node target/scripts/seed-demo.mjs <destination>

dev — reads the discrete DATABASE_* values from the repo-root .env.dev (Postgres from docker compose up -d postgres redis).
compose — reads .env.compose, falling back to this project's compose destination file .env.prod-parity. Those in-stack values use the compose service name (postgres); when running from the host, override with the host-mapped port, e.g. DATABASE_HOST=localhost DATABASE_PORT=54069 node target/scripts/seed-demo.mjs compose (real environment variables always win over the env file), or run it inside the app container.
standalone / aws — no env file is read; the platform-injected DATABASE_* variables must already be set (run inside the deployed environment or through a wbsp db tunnel with the variables exported).

The script runs the pre-built bundle (packages/db/dist/seed-demo.js, produced by pnpm build in target/) when present, and otherwise falls back to tsx on the TypeScript source (packages/db/src/seed/demo.ts, also runnable as pnpm --filter @taxengine/db seed:demo). To wipe and reload demo data in a local environment, reset the stack with docker compose down -v && docker compose up -d postgres redis and run the script again.

Preparing a real stage/production system for first use (wipe + minimal base data, no demo records) is the sibling script target/scripts/init-prod.mjs — see user-docs/production-initialization.md.

Market Context

The global sales tax software market was $5.43B in 2025 and is projected to reach $10.88B by 2032 at ~10.44% CAGR (Research and Markets); the broader tax management software market is forecast at $25.4B by 2033. Buyer personas range from price-sensitive e-commerce operators on Shopify and Amazon to SaaS CFOs needing digital-services VAT, enterprise tax directors with SAP/Oracle ERP integrations, and marketplace platforms requiring seller-level remittance and 1099-K reporting. Recent consolidation — Stripe's TaxJar acquisition (2021), Vista Equity's $8.4B Avalara take-private (2022), and Thomson Reuters' $856M Pagero acquisition (2024) — signals strong strategic demand.

Project Status

The US core is implemented and shipping: calculation, nexus monitoring, exemption certificates, return preparation, and the audit trail are live (108/108 spec tasks, ~300 tests green), with a standalone preview image for evaluation. See user-docs/READ-ME-FIRST.md for the plain-language tour. Contributions, feedback, and domain expertise are welcome.

Contributing

We welcome contributions from developers, domain experts, and potential users. See CONTRIBUTING.md for guidelines.

Important: All contributions must be your own original work or clearly attributed open-source material with a compatible licence. Copyright infringement and licence violations will not be tolerated and will result in immediate removal of the offending contribution. If you are unsure whether a piece of code, text, or other material is safe to contribute, open an issue and ask before submitting.

Licence

Licence to be determined. See discussion for context.