Tax Help

[ryanstone]

Hello Everyone,

 

I am pretty new to OScommerce and have come across a problem that I cannot figure out. Often times with my business I have customers who purchase my product from one state but are having it shipped to another. I have been told that in that instance you should charge tax to the ship to address and not the bill to address. Does anyone know

A- if this is true

B- how to do it with OScommerce

 

Thanks for the help,

Ryan Stone

[knifeman]

Hello Everyone,

 

I am pretty new to OScommerce and have come across a problem that I cannot figure out. Often times with my business I have customers who purchase my product from one state but are having it shipped to another. I have been told that in that instance you should charge tax to the ship to address and not the bill to address. Does anyone know

A- if this is true

B- how to do it with OScommerce

 

Thanks for the help,

Ryan Stone

When you set up your tax zones, set them up for the staes you have a physical presence in. Oscommerce will charge tax when orders are shipped to that state. You do not need to cllect sales tax for states that you do not have a businees in. Those reidents are supposed to file their state tax returns and list all out of state purchases.

 

Tim

 

Interesting article

click here

[MrPhil]

So you're in New York, a customer is in ("billing address") New Jersey, and they're having the product shipped to Pennsylvania ("shipping address")? If you have no "nexus" (physical presence) in New Jersey or Pennsylvania, you would normally not charge either state's sales tax. A drop shipper, or an affiliate program, might count as a nexus, but you'd have to consult that state's tax people. If you have a nexus in New Jersey and/or Pennsylvania, you would charge NJ or PA sales tax on orders billed to and shipped to that state.

 

The sticky part is if you have a nexus in one state and not the other, and someone bills in one state and ships to the other. I think you have to follow that state's tax laws. Obviously, you could be in legal trouble if you knowingly aid and abet someone's avoidance of sales tax. The trouble is, which state would you charge sales tax for, if both are claiming that they are owed sales tax? Or, say, NJ claims on billing address, PA claims on shipping address, and you have a nexus in both?

     NJ           PA
  no nexus     no nexus        no sales tax charged
  no nexus     nexus           bill and ship to PA: charge PA sales tax
                               bill and ship to NJ: no sales tax charged
                               bill to PA, ship to NJ: if PA claims
                                  sales tax on billing address, you'll probably
                                   have to charge PA sales tax
                               bill to NJ, ship to PA: if PA claims
                                  sales tax on shipping address, you'll probably
                                   have to charge PA sales tax
  nexus        no nexus        (as above, roles reversed)
  nexus        nexus           bill and ship to PA: charge PA sales tax
                               bill and ship to NJ: charge NJ sales tax
                               bill to PA, ship to NJ: 
                                  if PA claims sales tax on shipping address, and 
                                   NJ claims sales tax on billing address, I'm not
                                   sure you would collect for either state!
                                  if PA claims sales tax on billing address, and
                                   NJ claims sales tax on shipping address, then it's
                                   anybody's guess as to who to collect sales tax for!
                                   maybe just collect and remit for NJ, would be a
                                    reasonable guess.
                               bill to NJ, ship to PA: (as above, but roles reversed)

Don't you just love the consistent, harmonized American sales tax system? It looks like you're going to need to consult with the tax authorities in every state where you have a "nexus", as to whether to collect sales tax based on billing or shipping address, and whether the address in question is your business's or your customer's (destination address) for the purpose of determining the tax rate (jurisdiction). Some states use your store/business address to set the rate, and others use the customer's address. The same questions arise within one state if the billing and shipping addresses differ (i.e., are in different tax jurisdictions). At least then, the rules are usually consistent as to which rate applies (the billing or the shipping address determines the rate and what's taxable).

 

And in the end, the consumer (payer and/or recipient) is responsible for making sure they pay the required sales and/or use taxes on things they buy not from a bricks-and-mortar store.

[ryanstone]

Thanks for the information about the taxes, that really cleared it up for me. I still am unsure about how to make OScommerce charge the tax of the state the item is being shipped to.

 

For example (this just happened a couple days ago) my company is in CA, we have a customer in UT. He orders a product from UT (billing address) but needs it shipped to one of his stores in CA (shipping address) so we need to charge him CA sales tax. However OScommerce is not charging him tax since his billing address is not in the same state as our nexus.

[knifeman]

Does your store charge tax if the billing address is CA?

My stores all charge based upon ship to address and I did not do anything special. Once I set up my tax zones, the site does it for me.

 

Tim