United States zip / county tax

zblur — Mon, 07 Aug 2006 15:32:53 +0000

I have been testing shopify recently and it is really nice system. I know there are many people asking for features but this one has kept me from switching yet.

I do not know how other states require taxes but the state of florida has a standard state tax and then counties have an extra % that is added if the shipping address falls within their area. The seller is then required to report the total sales in these counties.

tobi commented

tobi — Mon, 07 Aug 2006 19:39:42 +0000

This is the first time i hear about this…

Bummer.

I’d call my congressman :P

zblur commented

zblur — Mon, 07 Aug 2006 21:01:51 +0000

lol yeah give them a call for me.

I proposed this more for helping shopify with a heads up, then demanding it. I don’t know if other states require this? If not, then I dont think this would be worth it to get 1 state out of 50. But any online florida store owner not wanting a bad audit has to keep track of this.

Lee commented

Lee — Tue, 08 Aug 2006 01:42:07 +0000

Same here in New York State.

zblur commented

zblur — Tue, 08 Aug 2006 03:48:57 +0000

Well if New York requires it then I would suspect that there are many other states which do the same.

It was only a matter of time before the states wanted their cut of the internet money.

tobi commented

tobi — Tue, 08 Aug 2006 03:51:28 +0000

Is there a generally accepted way of handling this case with software which doesn’t support it?

tobi commented

tobi — Tue, 08 Aug 2006 13:26:47 +0000

Well shopify supports states/country taxes as well. It seems that in Florida even different counties may have different tax rates. This is the same in NY?

zblur commented

zblur — Tue, 08 Aug 2006 18:11:59 +0000

Yes it is called a Discretionary Sales Surtax. Counties have the right to add on a extra to the tax. So if a customer ships his item to a county which has a 1 surtax then the tax the customer will pay is 8% (state tax + surtax).

Then we are required to report total sales to these counties when we send the taxes in.

zblur commented

zblur — Tue, 08 Aug 2006 18:15:15 +0000

Sorry forgot to add one more thing. The surtax is added only on to the first 5K of total sales. After that there is no surtax.

I doubt this is a concern since I dont think many sellers will have a customer purchase over $5K. But I figured I would post it just incase.

Ryan commented

Ryan — Tue, 08 Aug 2006 22:30:15 +0000

This is the same in NY?

Oh yeah. Seattle has city taxes on top of king county tax on top of WA state tax. I have no idea which rates to use, much less expect shopify to support all of that. which reminds me, i need to call my accountant…

Jamie commented

Jamie — Tue, 08 Aug 2006 23:06:30 +0000

I live in Chaleston SC and the same is applied here a 1% county tax to line the mayor’s pocket, er I mean education.

Christina commented

Christina — Wed, 09 Aug 2006 06:17:11 +0000

Heh heh. And we thought Europe was complicated…

Well, Tobi, if you’re not throwing your arms up in despair yet, I’ll eat my chopsticks!

Now that the plot thickens, I’ll reiterate that I don’t think you should be setting any default tax rates at all. For these reasons:

I think it’s a complete waste of your time and talents, which would be much better used elsewhere :) than in keeping track of changing tax rates from Kansas to Kuala Lumpur – looks like that in itself could become a full-time occupation.

But if you don’t do this, and say your software doesn’t support it, you might lose quite a number of customers; at any rate those in non-default tax situations who don’t want the tax inspectors knocking at their door.

In addition to this, I think there’s an issue of liability. If you say you provide tax rates for all customers then you are taking on some measure of responsibility and potentially exposing yourself to being held liable for fraudulent tax declarations by litigious shopowners. These would not necessarily be malicious, but they could claim, with some (minor) justification, that they were misinformed by shopify, unless, of course, you guarantee 100% accuracy (or post great big disclaimers). Whereas when you run a business, you must fulfill certain minimal obligations, and one of them is to know who to pay taxes to. I really think that the responsibility for determining tax rates should rest upon those who are liable for it, not on you.

Plus: too much micro-management; too rigid a system: by solving one person’s problem, you might well complicate someone else’s.

So here are my unfinished thoughts on what a solution might look like:

Use the following steps for “Regions and Taxes

Richard Quick commented

Richard Quick — Wed, 09 Aug 2006 15:02:09 +0000

OK - here’s a scenario.

I’m from the UK. Our sales tax is called VAT and is set at 17.5%. It’s payable on some items, but not all. Food for example is exempt, so are books (I think).

At the moment my store sells food, but at some stage in the future I want to sell other products – such as books, souvenirs (we’re based in a major tourist region) etc.

Some of our products require us to charge VAT, some don’t.

AFIK, VAT isn’t payable on overseas orders.

Could Shopify’s tax system cope with this at the moment, or do I need to build VAT into the prices when we add VATable items?

Jamie commented

Jamie — Wed, 09 Aug 2006 15:28:09 +0000

I am not sure how feasible this is, but there are several services in the states that maintain databases/xml service for sales and use tax bases on zip code. eg:

Strike Iron

Tax Data Systems

Net Blazon

They aren’t cheap though. Am I wrong or don’t you only pay the sales and use portion of the tax if the sale is made in/to the county and city of origin? If that’s the case couldn’t the shopify store owner be responsible for inputing their information of what the tax is in their city/county and if a sell to zip code matches that information the local tax is applied, if not the local sales and use tax is not applied. That seems like a much simpler solution.

Jared Ross commented

Jared Ross — Fri, 02 Mar 2007 21:42:53 +0000

Any resolution on this, I am in Pennsylvania, we have both a State Tax. And then one of the counties (Allegheny) and one of the cities (Philadelphia) impose their own taxes. Is there any way to have a sub-sub region (county or city)?

Thanks,

Jared

danW commented

danW — Fri, 02 Mar 2007 21:48:05 +0000

Not sure exactly how your tax system works, but if all those tax agencies collect tax from any sale within pennsylvania, then you could add up the total percentage and charge one sales tax for your stat and then distribute it within your accounting software.

For example

State Tax 1%
Allegheny 1%
philadelphia 1%
—
Total Tax in Shopify 3%

I understand that your tax might be more. I think we all wish they would charge the amounts in this example!

Jared Ross commented

Jared Ross — Sat, 03 Mar 2007 15:05:48 +0000

Well I am in Allegheny County, so I have to pay a 6% Tax for all instate sales, and a 7% Tax on all in county sales. It is against the law to charge 7% in-state but our of county, so at this point I have to eat the 1%. Not the biggest deal, but the bookeeping is messy.
-Jared

chuckr commented

chuckr — Sun, 03 Aug 2008 02:47:48 +0000

Kansas Requires tax reporting down to the city level (Zip Code) Can anyone tell me how we might do this. It’s my understanding that they adopted uniform legislation that is working its way through many if not most state legislatures.

altazo commented

altazo — Tue, 05 Aug 2008 15:26:54 +0000

Georgia is the same. State taxes are 4% I believe and then every county adds 2-3%. Almost all add 3% so I made my statewide tax 7% which is fine but maybe Florida differs even more?

http://www.etax.dor.ga.gov/salestax/salestaxrates/LGS_2008_Jul_Rate_Chart_Moore_rates_08.pdf

shopcora commented

shopcora — Tue, 05 Aug 2008 16:22:03 +0000

Same in North Carolina. There is a state tax and then each county adds their own.

I even called the NC Dept. Of Revenue and told them that my e-commerce platform doesn’t support taxes beyond the state level.

Their position was that the merchant is responsible for collecting the right amount of tax at time of sale.

The person I was speaking to “officially” couldn’t give me any other advice, however he said informally that my best bet would be to charge the lowest tax rate to everyone and then just eat the difference at tax time(rather than overcharge tax to some people)

So thats what I do.