Sales Tax

Lawrence

I am considering implementing US sales tax into Brick Owl based on zip codes. Stores would have a settings page where they could enter multiple zip code suffixes with different sales tax rates for each suffix.

For the stores this concerns, would this be sufficient to handle the issue?

Additionally, should the calculation be based on the customers billing or shipping address?

budgetkids

Calculate using the billing address.

This would completely solve my issues. If you do this, I do not think you know how much I would appreciate it.

Chris

pumbaugh

Umm...I am pretty sure you need to do it based on the shipping address....or most of us would have billing addresses located in Oregon or Delaware I would imagine. I am no legal beagle, but that would make the most sense to me.

budgetkids

yikes. well it actually depends on your state. Here is an excerpt from this posting on another forum:

http://money.stackexchange.com/questions/12316/is-sales-tax-for-online-purchases-based-on-billing-or-shipping-address



"Apparently it's based on either the address of the seller or vendor or your shipping address; from the AccurateTax.com blog post Destination and Origin Based Sales Tax:

... a few states have laws that are origin-based, where products that are shipped to the customer are taxed based on the location of the business itself. As of this writing, these states are

Arizona
California
Illinois
Mississippi
Missouri
New Mexico
Pennsylvania
Texas
Utah
Virginia

Most states use destination-based sales tax, which defines the source of the transaction to be the destination at which the product will eventually be used, or the address to which the product is shipped. ... The following states [and districts] operate on a destination-based model at the time of this writing:

Alabama
Arkansas
Colorado
Connecticut
District of Columbia
Florida
Georgia
Hawaii
Idaho
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Nebraska
Nevada
New Jersey
New York
North Carolina
North Dakota
Ohio
Oklahoma
Rhode Island
South Carolina
South Dakota
Tennessee
Vermont
Washington
West Virginia
Wisconsin
Wyoming

The page Do I Charge Sales Tax or Not? from about.com seems to (somewhat) clarify that if the business is located in a state (or other jurisdiction) with an origin-based sales tax, then they will charge you the sales tax for their state and, presumably, not the sales tax for the state of the shipping address"


Hope this help everyone (glad I have not had any MN sales yet!)

Chris

Lawrence

That's rather unhelpful. It seems very challenging to avoid a situation of the buyer entering all their details, only to then find the cost has gone up. I will have to do some thinking.

DagsBricks

Let's not forget about local taxing districts such as Ashland, OR, Orange County, California, and the Reedy Creek Improvement District. Not sure if the latter is a sales or property tax district but the point is that there can often be more than one's local state tax.

Brian

pumbaugh

I do not think we are trying to capture every single possible scenario here. The largest overarching sales tax issue is registered businesses are supposed to collect sales taxes for goods shipped to locations in which they have physical presences(ie, I only need to collect sales taxes to those shipped orders located within my state). This is the broadest and most encompassing tax issue imo. Those that live in some of the Crazy tax districts are/should be aware of what they need to do and act accordingly. I would not expect Lawrence to get into all that, but I think the basics are easy enough...and from everything I have read from semi-legit interwebs sources, it seems it would be based strictly on the shipping address....if you are conducting business in a crazy tax zone that requires you to do more, well the business should do what is required of them, but I do not expect Lawrence to implement rules for every crazy tax situation:)

budgetkids

I would maybe have sellers type in the zip codes in which we would need to collect sales tax, and for each zip code we can type in the percentage that zip code is supposed to get charged.

I agree pumbaugh, not every single scenario needs to get thought of. It can be built more in depth as time goes. The majority of stores are hobbies and this means nothing to them. Only a handful are legal businesses here.

DagsBricks

I do not think we are trying to capture every single possible scenario here.

I just don't want anybody thinking they've taken care of matters with BrickOwl's info when in fact they could have some more due diligence left to do. Obviously a large red asterisk on BrickOwl's part would be in order.

pumbaugh

I am not sure I see your point. As a registered business I am responsible for all my tax liabilities regardless of the feature set BO or any other site may provide. Every purchase made here in the states should come with a big red asterisk warning people of the use tax they probably owe to their respective states on their purchases according to your logic it seems. The purpose of providing a system to collect a variable tax that is applied in 48 or so of the 50 states last time I remember seems like a worthwhile venture. I think it will help draw other business to the Owl as it simplifies a business requirement. just my .02. It only applies to those required to collect the taxes.

DadsAfol

No need to build and maintain. Just use an API like http://www.zip-tax.com/

Eliminates risk/liability for errors. Handles frequent updates and changes.

-Jason

Thor

If you do this, please make it OPTIONAL for sellers, since I like to calculate any sales tax for each unique individual buyer. As Brian stated, sales tax can vary even within the same state (because some cities and counties also have a sales tax in addition to the state). Using zip codes to determine the tax won't help because zip code boundaries and sales tax boundaries do not always match. Also, many states require their residents to pay sales tax even on online purchases from out of state. This is probably the one tax law that is most unknown and ignored by taxpayers.

In short... I would rather calculate sales tax (if any) myself rather than trust it to a system unfamiliar with the complexities of the Byzantine US tax system.

Thor

Thor

I should add that it is illegal in many states to charge and collect the wrong amount of tax. Most tax auditors don't seem to understand the concept of an "honest mistake". And, by going out on a limb and implementing a system which may occasionally incorrectly calculate these taxes, YOU and BO could find yourself in legal hot water. Don't mess with calculating taxes for others unless you can do it correctly 100% of the time. It is one thing when you make a mistake on your own taxes. It is completely another if you create mistakes for others.

Thor

budgetkids

hmmm. This is proving complex, I do like the idea of an API doing all the work. The fees on the website @DadsAFOL suggested seems to have a very reasonable subscription cost.

I still hope this gets implemented!

@Thor so if you need to charge tax to a buyer when they have already paid, do you contact them requesting more money for the taxes?