diff --git a/studio/tests/components/Billing/TaxID.utils.test.js b/studio/tests/components/Billing/TaxID.utils.test.js
new file mode 100644
index 00000000000..7720b4a747b
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+++ b/studio/tests/components/Billing/TaxID.utils.test.js
@@ -0,0 +1,49 @@
+import { sanitizeTaxID } from 'components/interfaces/Organization/BillingSettings/TaxID/TaxID.utils'
+
+/**
+ * We're sanitizing EU tax ids. Stripe expects a prefixed tax id (ATU12345678),
+ * but users might not realize this and enter only the numbers (12345678) without the
+ * country code prefix.
+ *
+ * Our sanitize function should handle 3 cases:
+ *  1. take an un-prefixed tax id (12345678) and add the country prefix to it (ATU12345678)
+ *  2. take a correctly prefixed tax id (ATU12345678) and just pass it through
+ *  3. take a non-EU tax id and just pass it through
+ */
+describe('TaxID utils: sanitizeTaxID', () => {
+  test('should prefix an EU tax ID correctly', () => {
+    const austriaTaxID = {
+      id: 'txi_1LoPlYJDPojXS6LNVd1FOTk2',
+      type: 'eu_vat',
+      value: '12345678',
+      name: 'AT VAT',
+    }
+
+    const sanitizedID = sanitizeTaxID(austriaTaxID)
+    expect(sanitizedID.value).toBe('ATU12345678')
+  })
+
+  test('should check that EU prefix is correct', () => {
+    const austriaTaxID = {
+      id: 'txi_1LoPlYJDPojXS6LNVd1FOTk2',
+      type: 'eu_vat',
+      value: 'ATU12345678',
+      name: 'AT VAT',
+    }
+
+    const sanitizedID = sanitizeTaxID(austriaTaxID)
+    expect(sanitizedID.value).toBe('ATU12345678')
+  })
+
+  test('should not prefix an non-EU tax ID', () => {
+    const unitedStatesID = {
+      id: 'txi_1LoPlYJDPojXS6LNVd1FOTk2',
+      type: 'us_ein',
+      value: '12-3456789',
+      name: 'US EIN',
+    }
+
+    const sanitizedID = sanitizeTaxID(unitedStatesID)
+    expect(sanitizedID.value).toBe('12-3456789')
+  })
+})