Sales Tax

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For any online sale, the general rule is: Only in-state orders are taxed. Out-of-state orders are never taxed. So, if an order is shipped to an address within the state or is being picked up at the store, the order is taxed and the store is responsible for remitting this tax to their respective state.

The tax rate depends on whether it is ‘Source based’ or 'Destination based'. Not sure which your site is using? Navigate to: Store > Configuration > Taxes, right above the blue ‘Add a tax rate’ link is a line of text that will tell you 'This site uses __________'. You can also review Origin v. Destination Tax States for more details.

SOURCE BASED

Source-based tax is the default for all IndieCommerce websites and charges tax on an order according to its 'source' location.

  1. For shipped orders, we use the rate at the primary store outlet
  2. For store pickup orders, we use the rate at the pickup location

When an IndieCommerce site is initially configured for you, we will set 2 tax rules by default:

  1. For the tax rate at your store location
  2. For NY Tax - when an order is shipped from a store outside of NY to an address within NY. Though it is an out-of-state order, since it is shipped to NY and ABA has nexus in NY, we charge NY tax. It is equivalent to saying that ABA is doing the sale. The rate is the rate at our office zip in White Plains and ABA is responsible for remitting this tax to NY state.

CREATING TAX RATES

Tax rules control the tax rate (for 'Source based' tax), when the tax is applied, to what items and lines tax is applied and how it is displayed to your customers.

Navigate to: Store > Configuration > Taxes > Add Tax Rate

  1. Fill in the ‘Name’ of the tax rule
  2. Provide the ‘Rate’ (this is especially important for 'Source based' tax as it will control the amount calculated for tax).
  3. Select when to apply tax to products
  4. Select the product types to tax - those left unselected will not be charged tax
  5. Select which (if any) line items also need to be taxed - If your state requires shipping and/or coupons to be taxed, enable the appropriate line items.
  6. Set the weight - Taxes are sorted by weight and then applied to the order sequentially. This value is important when taxes need to include other tax line items. In most cases, you will leave the weight to default to 0.
  7. Include this tax when displaying product prices - if selected this tax will be displayed on the product page along with price information.
  8. Tax inclusion text - If you enable the above preference in step 7, you will want to include a short message indicating tax is included in the price here.
  9. Submit

ADDING CONDITIONS

Much like other rules you can create in your IndieCommerce site, tax rates will also have conditions. For instance, the conditions below are set for each of the tax rules we set up for you:

Navigate to: Store > Configuration > Taxes

NY Tax Rule

Condition 1 - Check an order’s shipping state

  1. Select the ‘Conditions’ button for the tax rule you want to add a condition
  2. Select ‘Add Condition’
  3. Select the ‘Condition to add’ - choose ‘Check an order’s shipping state’ found under ‘Order’
  4. Select your ‘Value’ - choose ‘New York’
  5. Save

Condition 2 - Order has a shipping quote from a particular method that is NOT Store Pick-up

  1. Select the ‘Conditions’ button for the tax rule you want to add a condition
  2. Select ‘Add Condition’
  3. Select the ‘Condition to add’ - choose ‘Order has a shipping quote from a particular method’
  4. Set your ‘Value’ to ‘In-store Pickup’
  5. Select ‘Negate’
  6. Save

These conditions mean when an order is being placed, the system checks to see if the order is being shipped to NY and that it is not a store pick-up, and then applies appropriately.

Your Tax Rule(s)

The two conditions you will create should apply as ‘OR’

  1. Select +Add or
  2. Continue

Now create your conditions:
    
Condition 1 - Check an order’s shipping state

  1. Select the ‘Conditions’ button for the tax rule you want to add a condition
  2. Select ‘Add Condition’
  3. Select the ‘Condition to add’ - choose ‘Check an order’s shipping state’ found under ‘Order’
  4. Set your ‘Value’ - you would select the state your store is based in
  5. Save

Condition 2 - Order has a shipping quote from a particular method

  1. Select the ‘Conditions’ button for the tax rule you want to add a condition
  2. Select ‘Add Condition’
  3. Select the ‘Condition to add’ - choose ‘Order has a shipping quote from a particular method’
  4. Set your ‘Value’ to ‘In-store Pickup’
  5. Save

Using the drag and drop arrow, drag both conditions to be indented under the previously add ‘Or’ element and save changes.

These conditions mean when an order is being placed, the system checks to see if the order is being shipped to a location within your state or being picked up at your store, if it is, it applies your ‘Tax’ rule.

STORES WITH MULTIPLE OUTLETS

For stores with multiple outlets, you will need to have the rules and conditions mentioned above but you will also need to create a tax rule for each additional outlet and add an additional condition.

  1. Create the tax rule for your additional outlet(s) following the steps 1-8 above under 'Creating Tax Rules'
  2. Follow the steps to apply conditions 1 and 2 found under 'Your Tax Rule(s) above
  3. Add a third condition

    • Select the ‘Conditions’ button for the tax rule you want to add a condition
    • Select ‘Add Condition’
    • Select the ‘Condition to add’ - choose ‘Order has a store pickup from a particular outlet
    • Set your ‘Value’ to the outlet location
    • Save

Repeat steps 1-3 until all outlets have their own tax rule created and configured.

ADJUSTING TAX RULES FOR PRODUCT CLASSES

In most cases, you will sell both taxable and non-taxable items. You will be able to select which ‘Product Classes’ are taxed and which aren’t when setting up tax rules, along with what line items are taxed.

Navigate to Store  > Configuration > Taxes

  1. Select ‘edit’ in the ‘Tax’ row
  2. Scroll to ‘Taxed Product Types’ - find the class you are looking for:

    • If the checkmark is PRESENT, the product class will be taxed
    • If the checkmark is REMOVED, the product class will not be taxed.
  3. Scroll to ‘Taxed line items'

    • If your site is enabled to allow coupons, you should select the ‘Coupon discount’ line item to be taxed
    • If your state requires shipping to be taxed, you should select the ‘Shipping’ line item to be taxed
  4. Click Submit at the bottom of the page.
  5. Repeat for ALL Tax options listed until all tax types are modified.

DESTINATION BASED

Destination-based tax can be enabled by request. Send an email to staff@bookweb.org requesting the ‘Destination Based-Sales Tax’ module be enabled. For stores with destination-based tax enabled, an order will be taxed according to its ‘destination’ source.

  1. For shipped orders, we use the rate at the destination zip
  2. For store pickup orders, we use the rate at the pickup location

For destination-based tax, the rate provided through individual tax rules will be ignored and will instead be pulled from and calculated based on the Tax Rate table provided through the IndieCommerce database. This tax rate is based on the city, state and zip code combination provided for the delivery address and still only applies to orders placed within the state of where the store is located. All other settings (such as, which product classes and line items are taxed) will still apply.

 

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