The 2 of 3 Rule is a means of determining which tax jurisdictions are used when applying taxes to a call. Three factors are used:
the state where the customer is located
the originating state of the call
the terminating state of the call
If the customer state and the originating state are the same, the call is taxed per that state's taxes.
Example: If the customer state is NY and the call originates in NY and terminates in PA, the call is taxed per NY taxes.
OR
If the customer state and the terminating state are the same, the call is taxed per that state's taxes.
Example: If the customer state is NY and the call originates in PA and terminates in NY, the call is taxed per NY taxes.
OR
If the originating state and the terminating state are the same, the call is taxed per that state's taxes.
Example: If the customer state is PA and the call originates in NY and terminates in NY, the call is taxed per NY taxes.
OR
If there are three separate states, the call is taxed at the federal tax rate.
Example: If the customer state is PA and the call originates in NY and terminates in CA, the call is taxed per federal taxes.
If the Bypass 2 of 3 Rule check box is selected, these checks are not performed and all calls for that service type are taxed per the customer's state taxes (conference calls, for example).