# Manage draft subscription invoices with invalid tax location details

Automatic tax with Stripe Billing relies on a customer's location to determine the correct tax rate. If a customer’s address, payment method's address, or default payment method is changed or missing, Stripe Tax may not be able to determine a valid tax rate.
When Stripe Tax can’t determine a tax rate, the subscription invoices stay in "draft" status until you resolve the issue which means subscriptions remain active and payment is not collected, so you may be providing services to these customers without receiving payment. 
You were notified via webhook and email when your first subscription invoice failed to finalize. On November 25, 2024, Stripe is improving product behavior and automatic guardrails to prevent similar issues in the future.
## **Identifying and exporting unpaid invoices**
Follow the below steps to 1) identify subscriptions and invoices that failed to finalize, 2) find the reason for their failure, and 3) export this information as a CSV file. You can use the Stripe Dashboard or the Invoicing API.
### Identifying invoices that failed to finalize due to invalid customer tax location
1. [This pre-filtered link will take you to the relevant invoices.](https://dashboard.stripe.com/invoices?type=subscription&automatic_tax%5Benabled%5D=true) Results are filtered by **Frequency: Subscription invoice** and **Automatic tax: Enabled** to help you focus on automatic tax enabled subscription invoices.
1. Click **Export**.
1. Select columns **Last Finalization Error Code** and any others you’re interested in.
1. Export.
1. Filter results by Last Finalization Error Code = [customer_tax_location_invalid](https://docs.stripe.com/error-codes#customer-tax-location-invalid).
### Identifying subscriptions with invalid customer tax location
1. This [pre-filtered link](https://dashboard.stripe.com/subscriptions?automatic_tax%5Benabled%5D=true&status=all) will take you to the relevant subscriptions. Results are filtered by **Automatic tax: Enabled** to help you focus on automatic tax enabled subscriptions only.
1. Click **Export**.
1. Choose “Custom” in the columns drop down and select **Tax Location Recognized** and any others you’re interested in.
1. Export.
1. Filter results by **Tax Location Recognized** = false.
## **What are my options for previous draft, unpaid invoices?**
You can address the draft invoices you identified in two ways depending on the specific error: whether the invoice requires an updated address or is missing a default payment method. Identify the underlying issue and based on your business need, choose one or more of the solutions described below. 
### Solution 1: Reattempt collection
Reattempt payment collection on each invoice with automatic tax by adding the missing details. Alternatively, disable automatic tax before finalizing the invoice.
Before proceeding with any of the below steps, we recommend confirming with the impacted customers that they still intend to subscribe to your service. Failure to do so could result in chargebacks. To try collecting payment:
1. **Verify there's a valid payment method for your customer** if your invoice is [set](https://docs.stripe.com/billing/collection-method) to charge automatically. If the default payment method is missing, contact your customer to add one.
1. If your invoice is [configured](https://docs.stripe.com/billing/collection-method) to send an email instead of charging automatically, skip this step.
1. **Collect a customer location, or proceed without taxes.**
**(Option A) Collect a valid location for the customer**: [Update the customer's address](https://docs.stripe.com/tax/customer-locations#other) using one of:
* The [Customer Update API](https://docs.stripe.com/api/customers/update#update_customer-tax-validate_location).
* The [Stripe Dashboard](https://docs.stripe.com/billing/customer#edit-a-customer)
* Sending a [Customer Portal link](https://docs.stripe.com/no-code/customer-portal#set-up-customer-portal) to your customers. To provide a link that goes directly to where your customer can update their billing details, add `/customer/update` to the end of the [session URL](https://docs.stripe.com/api/customer_portal/sessions). This will look like: https://billing.stripe.com/p/session/<SESSION_ID>/customer/update
**(Option B) Collect without tax**
* **Turn off Stripe Tax**. Use the [update invoice API](https://docs.stripe.com/api/invoices/update#update_invoice-automatic_tax-enabled) or invoice editor in the Dashboard to [disable automatic tax](https://docs.stripe.com/tax/faq#how-to-turn-off-stripe-tax) on the invoice.
* **Finalize and then pay or send the invoice to collect payment**. Use [the Dashboard](https://docs.stripe.com/invoicing/overview?dashboard-or-api=api#paid) to finalize and then either send or process payment on the invoice depending on your business's collection method. Alternatively, use the [finalize](https://docs.stripe.com/api/invoices/finalize) API as well as either the [send](https://docs.stripe.com/api/invoices/send) or [pay](https://docs.stripe.com/api/invoices/pay) API.
* [Resume collection on the Subscription.](https://docs.stripe.com/billing/subscriptions/pause-payment#unpausing)
**⚠️** When **finalizing the invoice without automatic tax**, keep in mind that tax will not be calculated or collected on that invoice. **You’ll need to manage any related tax responsibilities. We recommend connecting with your tax advisor for guidance.**
### Solution 2: Cancel subscriptions (recommended when payment details can't be collected)
If services weren't provided or if collecting payment is not feasible, cancel the subscription by navigating to the subscription [in your Stripe account](https://docs.stripe.com/billing/subscriptions/cancel). It's not possible to void or delete draft subscription invoices so no further action is required.
## **What is Stripe doing to prevent future invoices from being stuck in draft?**
### Prevent invalid updates to customer locations
**Effective Date:** Starting Nov 25, 2024
Our [Customer Update API](https://docs.stripe.com/api/customers/update#update_customer-tax-validate_location) now prevents customers from updating their addresses to invalid locations when they have subscriptions with automatic tax enabled. For invalid addresses, the API returns an HTTP 400 error with the code `customer_tax_location_invalid`. As before, the Customer Portal validates addresses entered by your customers to ensure they are valid for Stripe Tax.
### Disable automatic tax when auto-finalizing invoices with invalid locations
**Effective Date:** Starting Nov 25, 2024
When a subscription renews automatically, we'll attempt to calculate tax and [finalize](https://docs.stripe.com/invoicing/integration/automatic-advancement-collection) the invoice. If tax calculation fails because the customer location is invalid, then automatic tax calculation will be disabled on the invoice and its subscription.
In this scenario, the invoice will be finalized without calculating or collecting tax, rather than remaining in a “draft” status. This change allows you to collect payment even when tax can't be calculated. You’ll receive [events](https://docs.stripe.com/billing/subscriptions/event-destinations#events) for this change, such as `invoice.updated` and `customer.subscription.updated`, showing that automatic tax has been turned off. These allow you to take action on invoices and subscriptions that are missing valid location inputs and re-enable automatic tax for future payments. The `automatic_tax[disabled_reason]` field will be set to `finalization_requires_location_inputs` on this invoice. In the case of a missing payment method, the invoice will finalize and payment failures will be retried according to Stripe's [standard retry and recovery processes](https://docs.stripe.com/billing/subscriptions/overview#recurring-charges). After reaching the maximum number of attempts, the subscription may transition to a `past_due` or `canceled` status, depending on your Billing settings.
This change does not apply when finalizing an invoice via the Stripe API or Dashboard. In those cases, automatic tax stays enabled if the customer location is missing or not valid, and the finalization fails with a HTTP 400 error.
To review subscriptions without automatic tax calculations in your Stripe Dashboard, visit your **Subscriptions** page and filter the view by the **Automatic tax not enabled** option.
To reactivate automatic tax for these subscriptions in the future, ensure that there is at least one valid customer location available. You can then activate automatic tax through the [Stripe Tax dashboard](https://dashboard.stripe.com/tax/migrations).
### **Tax liability for past invoices**
Sales tax, VAT, or GST can’t be retroactively enabled for past invoices. As a merchant, you remain liable for any applicable taxes on sales made prior to the implementation of any tax settings. It is essential to ensure compliance with tax regulations moving forward, and we recommend consulting with a tax advisor to understand your obligations regarding previous transactions. If you have any further questions or need assistance, reach out to our support team.