# Taxability of credit card surcharges at checkout

Source: https://developer.avalara.com/sales-tax-integration-guide/lae3836686352455/

# Taxability of credit card surcharges at checkout

Understand how AvaTax handles credit card surcharges at checkout, when to include a surcharge line item, and when to call AvaTax to calculate tax accurately.

AvaTax treats a credit card surcharge as a line item on a transaction. You can assign a tax code to the surcharge line item. The taxability of payment surcharges varies by jurisdiction. In some states, including Washington and Hawaii, credit card surcharge revenue is subject to gross receipts tax or Business and Occupation (B&O) tax.

If you pass credit card processing fees to buyers at checkout, your integration must send the surcharge line item to AvaTax before payment is processed.

-   **Tax code configuration:** Associate a tax code with the credit card surcharge line item. AvaTax provides the tax code `OF060001` for payment processing surcharge fees. Ensure your platform allows merchants to configure or map this tax code.

-   **Call timing:** The `CreateTransaction` call to AvaTax must take place after the customer selects their payment method and the surcharge is added to the order total, but before the credit card is authorized or charged.

-   **Line item presentation:** Treat the surcharge as a separate line on the transaction payload, specifying the quantity, amount, and the assigned `taxCode`.

Important

If your system calls AvaTax when shipping is selected and does not make a subsequent calculation call after payment method selection, AvaTax does not evaluate the surcharge amount. This results in uncalculated tax liability and unrecorded gross receipts.

Tip

**Marketplace consideration**:

Under marketplace facilitator laws, the marketplace platform may be the party legally responsible for collecting and remitting tax. Omitting surcharge lines from the AvaTax calculation exposes both the seller and the marketplace platform to tax liability.

To find specific fee and surcharge tax codes, use the [Avalara Tax Code Search tool](https://taxcode.avatax.avalara.com/) or query the `ListTaxCodes` API endpoint (see _Tax code lookup_).