New Tax Profiles

Lawrence

"Tax Profiles: There is a new settings page in your store settings section. This can be used to create "tax profiles" which give more fine-grained control over how tax is applied to customers. It now supports the US tax system allowing you to have multiple tax rates, filtered by zip code ranges. It also allows you to specify whether you want your shipping rates to have tax removed or not. EU Users of the previous tax system have had their tax profile transferred over."

For any US sellers that will make use of this new system, could you post and let me know how it works out for you, if anything needs changing or if it works fine etc.

Merry Christmas.

DadsAfol

In the US, many states apply sales tax only if both the buyer and seller reside in the same state. Any way to simplify it and just have a tick box or profile type for "same state" rather than messing with zip code ranges?

Lawrence

You can usually google something like "zip code range" to find the range you want. The form is complex because the situation varies between countries and states so I don't want to make any assumptions on behalf of the user.

DagsBricks

In the US, many states apply sales tax only if both the buyer and seller reside in the same state. Any way to simplify it and just have a tick box or profile type for "same state" rather than messing with zip code ranges?

You're California, right? 90000-96199, done. :-)

Although Texas might be a little harder since it has multiple anomalies. Still, Google, is amazing and there's an article on Wikipedia http://en.wikipedia.org/wiki/ZIP_code that breaks it down as well as many other lists: https://www.google.com/search?q=california+zip+code+range&ie=utf-8&oe=utf-8#q=zip+code+ranges+by+state

wisebricks

I was eager to try this out since I'm in NC and it has some of the most horrid sales tax in the US IMO. I wish I could use ZIP code ranges but it simply won't work for a state like North Carolina.

in NC, you may have a ZIP code that lands in the middle of a range that is taxed at a higher/lower rate. The only way around this would be to implement a table where we could upload say a CSV file containing all ZIP codes and the sales tax that should be applied to each. Any chance on getting something like this implemented in addition to the range?

Lawrence

So if you want to enter a range, with an exception in the middle, you should be able to split that into three profiles with seperate ranges

wisebricks

So if you want to enter a range, with an exception in the middle, you should be able to split that into three profiles with seperate ranges

Except my range would be single ZIP codes. I would have to create ~250 or so sales tax profiles in order to meet sales tax requirements for my state. There are VERY few contiguous blocks of ZIP codes and the worry would always be that a new ZIP code is introduced in a range you have defined but with a different sales tax percentage.

Charging sales tax isn't something you can do halfway, it needs to be 100% correct from the start.

pumbaugh

How are you currently collecting and remitting your sales tax? If you are currently remitting your taxes based on your sales receipts totals here....couldn't you just collect the base rate and remit the full adjusted amount at your reporting times?(reduces the amount you are building into your products, if you are not separately collecting, but still remitting based on sales totals) I would look to other sites like etsy and see how they/sellers on that site handle it.

I am sure it has been approached by other more established sites, instead of trying to figure it all out new, see what has worked for other places....naturally contacting a tax expert in NC would prob yield the best results.

DagsBricks

What about being able to utilize boolean for tax rates? For instance:

5%: 27000-27010, 27013, 27020, 27022-27024
6%: 27011, 27012, 27014-27018, 27025
7%: 27019, 27012, 27026-27031

etc.

wisebricks

How are you currently collecting and remitting your sales tax? If you are currently remitting your taxes based on your sales receipts totals here....couldn't you just collect the base rate and remit the full adjusted amount at your reporting times?(reduces the amount you are building into your products, if you are not separately collecting, but still remitting based on sales totals) I would look to other sites like etsy and see how they/sellers on that site handle it.

I am sure it has been approached by other more established sites, instead of trying to figure it all out new, see what has worked for other places....naturally contacting a tax expert in NC would prob yield the best results.

I'm not new to NC tax law and have had a business for several years...I'm just new to the LEGO game. I have tables setup in PayPal (using them as an example) to assign sales tax properly based on ZIP code. PayPal has the ability to accept delimiter separated ZIP code values as a sub-item of a tax value. Unfortunately this only works f you use PayPal as the store platform so it really isn't much use for most.

How I handle NC sales tax now is to simply do a tax-inclusive handling of the sales tax for any sales made to those living in NC. I lookup their sales tax amount by their address via Avalara's free tax database and apply that amount to their account in my own accounting system (I use Xero).

If I send a bill directly from my accounting system (Xero) then that customer would be taxed according to their customer record and the tax tables I have set for them based on their address, but again...this is only if it originates in my system. Bricklink and Brick Owl orders obviously originate outside of my system and thus I have no control over taxing...I have to handle it as tax inclusive (reducing my profits for NC customers).

FWIW, ZIP codes aren't the best way to do sales tax as it isn't 100% guaranteed that you will get the correct tax rate. The only right way to do it is based on the full address. Yes...there are ZIP codes in North Carolina that contain DIFFERENT sales tax percentages.

I have a hunch that most small sellers (e.g. Etsy and even here on BO or BL) simply do not handle sales tax properly (if at all).

wisebricks

What about being able to utilize boolean for tax rates? For instance:

5%: 27000-27010, 27013, 27020, 27022-27024
6%: 27011, 27012, 27014-27018, 27025
7%: 27019, 27012, 27026-27031

etc.

This would be a welcome addition and would handle it the same way that PayPal does. Still not perfect, but 99% of the way there!

The best way would be to tap into a third party database (e.g. Avalara) and do a lookup when an order is received. I think they charge ~$0.01 per commercial lookup however...so that may be asking a bit much.

DagsBricks

If I send a bill directly from my accounting system (Xero) then that customer would be taxed according to their customer record and the tax tables I have set for them based on their address, but again...this is only if it originates in my system. Bricklink and Brick Owl orders obviously originate outside of my system and thus I have no control over taxing...I have to handle it as tax inclusive (reducing my profits for NC customers).

Can you at least charge the base rate or lowest rate that could occur in NC? Or is that considered tax fraud?

wisebricks

If I send a bill directly from my accounting system (Xero) then that customer would be taxed according to their customer record and the tax tables I have set for them based on their address, but again...this is only if it originates in my system. Bricklink and Brick Owl orders obviously originate outside of my system and thus I have no control over taxing...I have to handle it as tax inclusive (reducing my profits for NC customers).

Can you at least charge the base rate or lowest rate that could occur in NC? Or is that considered tax fraud?

That's considered tax fraud under NC law unfortunately. You can't pay the tax on behalf of the customer either. You either have to collect the correct tax for the customer at time of payment or just do it as tax inclusive which just means lowering the sales price on the invoice for the customer to account for the difference. The latter is a bit of gray area but for a small seller, the state likely will not have you on their radar. I would wager large corporations would get flagged for review for this practice of discounting a sales price for NC customers to avoid tax on the standard price.