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Sales Tax by Manufacturer


djdeuce

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We have added a new manufacturer located in California to our catalog. They have to charge us a sales tax fee because of the laws in that state. So, now the dilemma is how do we charge sales tax in California for only this 1 manufacturer? We want California customers to be able to purchase our other products tax free so we can't just make a quick update in the admin. Please let me know if anyone has seen a contribution or post about this.

 

Thanks!

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I think somebody got their signals crossed here. I've never heard of such an arrangement. The manufacturer (in CA) should be selling to you wholesale, which is normally not subject to sales tax. If you sell a product (manufactured anywhere) to someone in CA, either sales tax needs to be collected (if you have a "nexus" in CA) or the customer is supposed to report the purchase (if you are out of state) and pay "use tax" (equivalent in amount to the sales tax). States are trying to coordinate efforts and uniformly collect sales tax everywhere, but AFAIK that's not yet law.

 

Please detail what's going on here (you can change names to protect the innocent...): why you are being charged sales tax on a wholesale purchase, whether you have any physical presence in CA, why CA customers should be treated any differently, how this product differs (with regards to taxability) from everything else you sell, etc.

 

If it turns out that you do have to collect CA sales tax for this one product, and not for any other, I suppose you could give all products by this manufacturer a different taxable code and work out something from there that only CA purchasers would pay sales tax. BUT, find out first if you're being scammed by the manufacturer, or someone misunderstood something. If you have to collect sales tax on something sold to CA purchasers, then all products sold to CA purchasers would be subject to sales tax (except for normally exempt items). Please clarify.

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Its a weird scenario and I've contacted the board of equalization and it is correct...as far as they are telling me. This manufacturers physical location is in California, so they said either they have to collect and pay the sales tax for me or I have to register with the state and pay it myself. Anyway, I guess I can live with that .... now my problem is, how do I charge just the California customers ordering products from that one manufacturer? I have several other manufacturers where I don't want to charge CA sales tax so I need code to single this out. I don't think this is something that can be done in the admin. You have any ideas Phil? Thanks!!!!

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they said either they have to collect and pay the sales tax for me or I have to register with the state and pay it myself.

Bizarre. What do they mean by "they have to collect and pay the sales tax for me"? I don't understand this. You are buying product from a manufacturer, wholesale (to be resold to customers). I still say you should not be paying any sales tax on your purchase from the manufacturer. Depending on what the item is, you may well be required to collect sales tax from purchasers you sell to in CA. Is that the "I have to register with the state and pay it myself" part? Are you located in CA, or another state with reciprocal tax agreements? Are any of these taxes actually not sales tax, but excise tax? And it's not the manufacturer's job to collect sales tax on your sales to your customers -- legally, it's your job to collect and remit sales taxes.

 

I would be leery of talking to a government "help line" -- my experience has been that they typically don't know their ass from their elbow. They may have thought you were asking a different question, such as "do I need to collect sales tax on this item I'm selling in CA?". If you are in CA yourself, you need to collect sales tax on taxable items. Is this particular item in a different category than your other products (they're non-taxable and this one is taxable)?

 

Anyway, I guess I can live with that .... now my problem is, how do I charge just the California customers ordering products from that one manufacturer? I have several other manufacturers where I don't want to charge CA sales tax so I need code to single this out.

What do you mean by "I don't want to charge CA sales tax"? Are these products non-taxable in CA? It doesn't matter who the manufacturer is -- it matters what the product is: taxable or non-taxable. I think you've been misled (or become confused), and I'm just trying to save you a lot of unnecessary effort in setting up a system you don't need.

 

Can't you give a different taxable status for each product in your catalog? Some are non-taxable in any state, some are taxable in certain states, etc.? Do rates vary within a state for various taxable item categories (e.g., New York tax jurisdictions drop all or part of the sales tax on inexpensive clothing)? How many states do you need to collect and remit sales tax in? You should be able to set up your tax rate(s) for just CA addresses, and mark your items non-taxable or taxable at one of (possibly more than one) rates.

 

Could the board administrator consider moving this to Ecommerce Laws? Maybe someone there can give more help. Hopefully you'll find someone familiar with the ins and outs of California tax law, who could give more definitive answers.

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Thanks for replying again Phil,

I have 4 different manufacturers and only this one manufacturer is located in California. Since they drop ship our items from their warehouse in California I'm being told that the law there is that we have to charge California customers sales tax. From the research I've done I'm pretty sure this is a legit law. The problem now is that I can't set sales tax up at the manufacturer level. I can only set up tax by state and then make the products taxable or not taxable. But I have to choose taxable on all the products because I have to charge tax on Missouri customers as well cause that's where I'm at. So I don't know how to choose only this manufacturer as taxable in California. Any ideas?

 

Thanks!

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Oka-a-a-a-ay. Now it's starting to make sense. If a manufacturer in CA is drop-shipping directly to customers, it would make sense for such sales to be taxable in CA. Now, the $64 question is, does this count as a "nexus" (physical presence in CA) for you, and will you now need to charge sales tax to all CA customers, not just this manufacturer's products?

 

Does this product in question only come from this one manufacturer? If so, you could specify per-product, couldn't you? If more than one manufacturer supplies this product, it will be difficult to deal with (require code changes). I'm not familiar with setting up multiple tax zones, but I think it can be done, something like:

 

.............................................................. CA ............ MO .......... all other states
product drop-shipped from mfr in CA: .. tax class "CA" ..... Cal tax rate .. Mo tax rate .... 0%
other products ........................ tax class "nonCA" .. 0% ............ Mo tax rate .... 0%

Arrrgh! Why don't they have decent BBCode, such as [table]?

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Thanks for the reply,

They are the only manufacturer that supplies these products and the only one in Cali. If I could somehow slap a tax just on those products for CA deliveries I would be good to go. I'm not sure what to make out of your last post on how to do this. Sorry, can you explain please? :)

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Hey Travis,

 

As Matt pointed out in the knowledge base.

 

Create a tax zone = California

Define a tax rate = 8.25%

Define a tax class = Manufacturer

 

Then when entering product information through your admin panel, select the tax class.

- :: Jim :: -

- My Toolbox ~ Adobe Web Bundle, XAMPP & WinMerge | Install ~ osC v2.3.3.4 -

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Thanks guys, that makes sense but how do I also charge sales tax if the customer is located in Missouri and buys this same product? If I create another tax rate for Missouri and assign it the same tax class name as I assigned to the product it will add both taxes together. Am I totally just not understanding? I'm only able to add one tax class to a product and then I'm also only able to add one tax rate to a tax class. So I'm totally hosed when I try to charge a sales tax to California customers and Missouri customers while giving anyone else the product tax free. I can only charge California or Missouri, but can't figure out how to charge both. Is there a way to do this?

 

Thanks again guys, I hope I'm not missing something obvious here.

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  • 7 months later...

Thanks guys, that makes sense but how do I also charge sales tax if the customer is located in Missouri and buys this same product? If I create another tax rate for Missouri and assign it the same tax class name as I assigned to the product it will add both taxes together. Am I totally just not understanding? I'm only able to add one tax class to a product and then I'm also only able to add one tax rate to a tax class. So I'm totally hosed when I try to charge a sales tax to California customers and Missouri customers while giving anyone else the product tax free. I can only charge California or Missouri, but can't figure out how to charge both. Is there a way to do this?

 

Thanks again guys, I hope I'm not missing something obvious here.

 

Im stuck in this same dilemma -- anyone out there have a fix? I'd even pay for something that works that I can install myself.

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OK, Travis is in Missouri. He has a drop-shipper in California. California says that anything drop-shipped from that mfr to a California customer must have California sales tax collected (apparently a drop-shipper counts as a "nexus"). Anything shipped to a Missouri customer must have Missouri sales tax collected (because Travis has a nexus in Missouri). So, for this particular item, it's taxable in two states, whereas everything else Travis handles is only taxable in Missouri.

 

I would think that you would set up a special tax class for this one product. For this class, there are two zones set up -- CA and MO. If it's adding both taxes for any customer, there's something set up wrong. I haven't actually tried this myself, so someone more experienced with tax classes and zones will have to speak to it.

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