# Sales Tax for Internet Sales



## Domboslice (Nov 16, 2011)

Hello, 

Does anybody have any knowledge in regards to charging sales tax to customers who purchase off of your website (preferably in California)?

I understand that I must charge sales tax to all in-state (california) purchases. 

Do I charge everybody in California the same %rate with regards to my county? Or do I have to charge the sales tax based on the location/zip code of the customer?

I did some research and even made some phone calls but I was told I need to charge based on the customers location. I don't believe this to be correct for e-commerce based on experience with purchasing items from other locations in California and only being charged the sales tax based on the location of the store. 

Any information would be a great help! Thanks!


----------



## jspofwilson (Feb 4, 2013)

based on the location of the store. you charge sales tax. that is where the work is being done


----------



## sben763 (May 17, 2009)

You need to follow your states guidelines. Not sure why a state just can't charge 1 sales tax for the entire state like ours. IL does the same thing different sales tax in differnt counties. 

What ever your state sales tax department says is what you must abide by. I think there was a thread where it was said in CA you have charge the tax for where its being shipped to.


----------



## Fixico (Dec 3, 2011)

Hopefully your state isn't as bad as what I have to put up with here in Oklahoma. I have to charge tax for the point of delivery, based on zip+4 (state/county/city). To make matters worse, the only way I've found to know exactly what to charge is by going through the states website, which is down half the time.


----------



## ericsson2416 (Aug 29, 2007)

Yup, we are point of delivery also here in WA. It's a mess. The city to the south of us is a 10 minute drive and different tax rate for when we deliver shirts.


----------



## Fixico (Dec 3, 2011)

They say they want our economy to pick up, but they keep laws like this in our way. 
Would it be so bad to just establish an internet sales tax for the state? I know several people that either refuse to sell online or don't collect sales tax just because of the headache. Anyone know who's arm we have to twist to get this changed?


----------



## binki (Jul 16, 2006)

For California you can do a simplified sales tax of the rate in your location. For instance our location is 8%. If someone from the next city over where tax is 8.25% is the rate we still charge 8%. The only time you need to be concerned about the rate is when you have very large transactions that are thousands of dollars. At that point you would use the tax rate of the delivery address. 

Now, since you are in CA you can get those rates and charge them if you like but you don't need to. 

Finally, you don't charge any sales tax for any purchase you ship out of state.


----------



## Domboslice (Nov 16, 2011)

Honestly it is just extra nonsense to deal with to make sure your business is properly set up and following these strict yet very confusing measures...unfortunately it takes away from the more important aspects of running a successful business such as selling. Smh


----------



## Louie2010 (Feb 26, 2010)

jspofwilson said:


> based on the location of the store. you charge sales tax. that is where the work is being done


While this explanation probably covers most people reading this, technically I believe that if you have any business locations or associates in a state you must charge tax. 

While not too common with most small businesses, there are always exceptions. Sometimes when located near a bordering state a business might have an additional location, or a permanent sales staff which happen to be in neighboring states. In that case I believe they must charge sales tax to all customer sales in both states regardless of which location preformed the work, or made the sale.


----------



## fbcwear2012 (Aug 15, 2012)

I'm in Georgia and the Tax Center said this when I asked about charging sales tax for people in different counties and states: The amount of tax to be assessed is determined by the point at which the customer takes possession of the item. Items sold to customers outside Georgia are not subject to Georgia tax.

The part I am confused about is when she said, "customer takes possession". Does that mean if they live in another county but purchase the shirt online from us we charge them their county's sales tax or ours?

Thanks!


----------



## Louie2010 (Feb 26, 2010)

Ana, does your counties charge sales tax in addition to the states sales tax?


----------



## fbcwear2012 (Aug 15, 2012)

Louie2010 said:


> Ana, does your counties charge sales tax in addition to the states sales tax?


Most of them do. The state tax is 4% but our county charges an extra 2% on certain items (basically anything other than food). Other counties charge extra but the codes are not the same and the rates vary by county. (up to 3% for some)


----------



## Louie2010 (Feb 26, 2010)

fbcwear2012 said:


> Most of them do. The state tax is 4% but our county charges an extra 2% on certain items (basically anything other than food). Other counties charge extra but the codes are not the same and the rates vary by county. (up to 3% for some)


I would ask your accountant, or better yet try and get the states tax office to respond in writing with an answer, and then keep it on file. If you do a lot of business in a variety of counties and one day you got audited, you certainly would not want to be liable for uncollected sales taxes.


----------



## fbcwear2012 (Aug 15, 2012)

Louie2010 said:


> I would ask your accountant, or better yet try and get the states tax office to respond in writing with an answer, and then keep it on file. If you do a lot of business in a variety of counties and one day you got audited, you certainly would not want to be liable for uncollected sales taxes.


They did send me an email (that's where that quote in green comes from) I just didn't understand exactly what she meant. Thanks!


----------



## Louie2010 (Feb 26, 2010)

fbcwear2012 said:


> They did send me an email (that's where that quote in green comes from) I just didn't understand exactly what she meant. Thanks!


LOL, I meant I would ask for clarification of what they meant and for them to specify exactly how it is determined. 

I assume it means that if you ship it to another county that your collect the county tax of the recipient in addition to the state tax. My point is that if you do a lot of business in a variety of counties, I wouldn't assume, but ask for clarification to be certain. If they would audit you one day and then you find out you have been doing it incorrectly it might not be very fun. 

PS. Do they have some type of central database where you can look up each counties sales tax? I would think that might be hard to keep up with each year assuming some may make periodic changes. If it were me I would also print off copies of the individual county tax rates each year for my own records.


Goof luck, sounds fun


----------



## fbcwear2012 (Aug 15, 2012)

Louie2010 said:


> LOL, I meant I would ask for clarification of what they meant and for them to specify exactly how it is determined.
> 
> I assume it means that if you ship it to another county that your collect the county tax of the recipient in addition to the state tax. My point is that if you do a lot of business in a variety of counties, I wouldn't assume, but ask for clarification to be certain. If they would audit you one day and then you find out you have been doing it incorrectly it might not be very fun.
> 
> ...


 LOL yeah fun. We are just getting started to be honest haven't made any sales yet (inquiries yes but no sales) and right now most people we know who plan to purchase are in other states. I just wanted to make sure beforehand. It took them a whole two weeks to get back to me before, it'll be interesting to see how long this one takes.  Thanks again!


----------



## fbcwear2012 (Aug 15, 2012)

Quick update:
I got a response this morning from the Georgia Tax Center and she said that I have to charge the tax (local) based on where the person lives even if they have to purchase online. Which is very taxing (noo pun intended) because #1, there are too many counties here and #2 some cities have more than one county. On paypal they only let you put the sales tax rate in by state or zip codes, not counties. I don't know what to do about that. Again we have no sales yet but I want to be prepared just if/when someone outside of Gwinnett County purchase shirts.

Anyone else use paypal for their site? Are there any others that can allow me to set up by county?


----------



## Louie2010 (Feb 26, 2010)

fbcwear2012 said:


> Quick update:
> I got a response this morning from the Georgia Tax Center and she said that I have to charge the tax (local) based on where the person lives even if they have to purchase online. Which is very taxing (noo pun intended) because #1, there are too many counties here and #2 some cities have more than one county. On paypal they only let you put the sales tax rate in by state or zip codes, not counties. I don't know what to do about that. Again we have no sales yet but I want to be prepared just if/when someone outside of Gwinnett County purchase shirts.
> 
> Anyone else use paypal for their site? Are there any others that can allow me to set up by county?


Unfortunately that's what I thought it sounded like they were going to require of you, too bad because that does sound like a hassle. 

You probably need to purchase or create a shopping cart that will allow you to set up a variety of tax fields. However that wouldn't help you if you sold on a place like e-bay for example. 

If you don't want to go to that hassle or expense when first starting I do have one idea that might make it much simpler for you, although it too has some drawbacks. Of course please talk with you accountant prior to doing anything unorthodox. 

What may be a simple solution is for you to just not charge the county taxes. Of course you must legally collect and pay them, so you find out which county in the state has the highest tax rate and use that as a rate that you will just incorporate into all your prices. Then if someone from your state purchases you just pay the county tax from where they live. 

The down side is that all your prices would be slightly higher across the board which could cost you some sales. That said it will earn you higher margins for more profit on every sale outside of the county in your state with the highest tax rate. But at least it might be an easy way to start until you figure out if your business is worth paying for a customised shopping cart specific to you needs.

You may also want to add a notation on the receipt to every online customer from your state that _"Due to the complexity of having such a wide variety of local county sales tax rates we will be paying the county tax for this sale instead of adding it to this bill." _That way no one can accuse you of not paying the tax.

This is probably not the best long term solution and really just off the top of my head, but at least you could start selling until you figure out a better way to handle it. 

You also may want to start another thread entirely asking how others in Georgia that sell online collect the local county sales taxes. There may be a member here from your state that figured out an easy solution. However bear in mind that someones answer may still not be a legal solution, so I would still always check with your accountant or the tax office before I conclude anything to be a permanent solution. An auditor won't accept _"I was told by someone"_ as an excuse. Likely your goal should be to buy/build a shopping cart that can do this for you.

I wish you well, let us know how it turns out.


----------



## fbcwear2012 (Aug 15, 2012)

Louie2010 said:


> Unfortunately that's what I thought it sounded like they were going to require of you, too bad because that does sound like a hassle.
> 
> You probably need to purchase or create a shopping cart that will allow you to set up a variety of tax fields. However that wouldn't help you if you sold on a place like e-bay for example.
> 
> ...


Thanks! Sounds good, because there are way too many zip codes to have to put in (I even contacted PayPal and they obviously didn't pay attention to my question because they told me to enter each zip code with their codes or use ranges, which I was already doing until I saw how many different zip codes there were for each county). I wish I had an accountant LOL eventually though.
thanks again and I will definitely return to let you know how it went.


----------



## molecul3 (Feb 16, 2012)

hey guys, this is a topic I wondered about as well.
If I am not in the US but get orders from to the US or any other country, any tax required?


----------



## greyhorsewoman (Jul 19, 2007)

> If I am not in the US but get orders from to the US or any other country, any tax required?


No, you cannot collect sales tax unless you have a sales tax license. So, you would have no authority to collect or submit sales tax to the US.


----------



## sben763 (May 17, 2009)

The green quote means exactly that. A state that has multiple sales tax and specifies that you must charge where they take possession ie another county in the mail. A lot of people ignore doing this. California is a state that your suppose to do this. It wouldn't be a problem unless a audit and then you might have a problem. If county tax is included that county can charge penalties and interest even if your county is more as you didn't pay the county it was due. Good thing is usually you pay your state tax department with report that list each county's tax that is due and they distribute the funds where needed. I'm glad I moved to a state that has 1 tax the entire state


----------



## binki (Jul 16, 2006)

sben763 said:


> California is a state that your suppose to do this. It wouldn't be a problem unless a audit and then you might have a problem. If county tax is included that county can charge penalties and interest even if your county is more as you didn't pay the county it was due.


CA does allow a simplified tax collection to be at the sellers location. You would have to check with the BOE to see if you qualify.


----------

