Destination based taxation - how is this set up?

[Guest]

We are trying to set up destination based taxation. My client says she is obligated to collect sales taxes on all transactions and then remit those to the appropriate State (in the US). I'm Australia based so this is all dutch to me.

 

So the website, whilst physically located in Washington State, has to apply taxes based on the destination of the order. So we have set up the 52 States as zones with their appropriate tax rates, all with 0 priority, and all tax rates are in the tax class "taxable goods".

 

All products have the taxable goods class of tax rate applying.

 

At checkout though it isn't applying the tax rate appropriate to the destination. It seems to be applying all of the tax rates instead, so we're getting ridiculously large taxation amounts being added to the orders.

 

I've searched but can't find a methodology to set destination based tax within the United States, depending upon which State you are in, and have it work.

 

Can anyone give me some assistance? Please please?

 

We are using version 2.2RC2.

 

Thank you!

 

Lisa

[lindsayanng]

That does not sound right to me. If your website's hub is based in the US, the only place that you would have to collect sales tax is within the state that the business is in.

 

You can control taxes in the administration area, its not that difficult, but would try and make sure that what your client believes is true. I live in the US, i have a website in Connecticut, USA - by law, i only need to collect sales tax for items shipped within the same state as my business

[fasterisbest]

Hi,

 

I need an answer to this question as well.

 

I am setting up taxes for a business based in Toronto, Canada. I need to apply 5% to all orders shipped within Canada and an additional 7% to all orders shipped only in the Province of Ontario. Can and one advise?

 

thanks in advance.

[fasterisbest]

Also, I noticed at sign up that there is no dropdown menu to select Province or State. Should there be a dropdown box with this information?

The business will only ship to Canada or the USA.

 

Thanks again.

[fasterisbest]

Also, I noticed at sign up that there is no dropdown menu to select Province or State. Should there be a dropdown box with this information?

The business will only ship to Canada or the USA.

 

Thanks again.

 

Sorry, I turned on Province/State in the admin area but it's still only a textfield box. How does one apply taxes to different provinces/state when the user can make mistakes entering province/state information?

 

Thank you.

[fasterisbest]

I think I got it.

 

Somehow the system recognizes postal codes and plugs in the right tax.

[MrPhil]

I agree with Lindsay Ann that your client is probably wrong, or else you/they are confused and thinking "states" when you should actually be thinking "counties". And how do you get 52 states? Your client is in Washington state? They only have to collect sales tax in states where they have a "nexus" (physical presence). Note that affiliate programs, drop shippers, warehouses/retail distribution centers, and (of course) brick-and-mortar stores may count as a nexus, so they should check with tax authorities in that state to see if they are required to collect and remit sales tax. For all other states which collect sales tax (not all do), buyers are on the honor system to report out of state purchases and pay "use tax" (equivalent to sales tax). It's irrelevant as to where the web server is. If it's a business that is headquartered/operated in Washington, and ships everything from there (no presence in any other state), then they only need to collect Washington state sales tax. I believe that WA uses "destination based" tax rates (the rate in the county or city where the customer receives the goods). There has been much discussion about a destination based tax module for Washington in this forum -- be sure to take a look at it.