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  1. #1
    Join Date
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    Default Setting up California Taxes

    I hope I'm doing this right.
    I plan to sell in the United States only and I'm in California. I followed "How to configure taxes (US State sales tax- single rate) that I found in FAQ section. This walked me thru to setting up the California State Tax. So did I use the correct set-up? is it correct to charge the California State Tax to anyone in the United States? I'm assuming that's correct since that is the tax I will be required to pay to the state. Thank you.

  2. #2
    Join Date
    Nov 2007
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    Burney, CA. USA
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    Default Re: Setting up California Taxes

    Quote Originally Posted by alma1 View Post
    I hope I'm doing this right.
    I plan to sell in the United States only and I'm in California. I followed "How to configure taxes (US State sales tax- single rate) that I found in FAQ section. This walked me thru to setting up the California State Tax. So did I use the correct set-up? is it correct to charge the California State Tax to anyone in the United States? I'm assuming that's correct since that is the tax I will be required to pay to the state. Thank you.
    You are only required to collect sales tax for the orders shipped to California. Unless you have a Re-Sellers Permit in another state (then you need to charge for that state too).

    Your best bet is to set it up so Sales Tax is charged based on Shipping Address, so only those orders going to California are charged Sales Tax.

    Be sure that when you set up your sales tax rate, that you set it at the highest rate for for any area you have busniess assets (meaning, if you have a warehouse in Los Angeles, and your home base is in Shasta County; you'd want to charge the Sales tax rate for Los Angeles, as it's the higher of the two taxes-- and that is what you submit to the Board of Equilization).

    Hope this helps.

  3. #3
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    Default Re: Setting up California Taxes

    Thank you, it helped a lot!
    Just to make sure I understand ...
    so on the Config, My Store, Basis of Product Tax and Basis of Shipping Tax I would select 'Shipping'. Right?
    and the rest of the set-up I did should be correct? (for the store location chose United States, California and input the state tax of 8.25% - which is the tax in the L.A. area.

  4. #4
    Join Date
    Nov 2007
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    Burney, CA. USA
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    Default Re: Setting up California Taxes

    Quote Originally Posted by alma1 View Post
    Thank you, it helped a lot!
    Just to make sure I understand ...
    so on the Config, My Store, Basis of Product Tax and Basis of Shipping Tax I would select 'Shipping'. Right?
    and the rest of the set-up I did should be correct? (for the store location chose United States, California and input the state tax of 8.25% - which is the tax in the L.A. area.
    You are welcome.

    F.Y.I.

    Under California's laws for collecting Sales tax, states: "You must charge sales tax on Shipping and Handling Charges that are in excess of actual shipping charges" (previous quote comes from a pamphlet included when you get your resellers permit from the BoE)... So what that basically means is; If you charge more then your actual shipping costs, you must also charge sales tax; but if you give a discount on your shipping charges (meaning you are charging the customer less then actual shipping costs) you are not required to tax shipping.

    As for the rest of the set-up it should be correct. If you decide to keep the sales tax on shipping charges, you'd still only need to charge sales tax to those orders being shipped to California-- so Tax basis should be based on "Shipping" for both.

  5. #5
    Join Date
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    Default Re: Setting up California Taxes

    I'll chime in here.

    According to the California State Board of Equalization, you are required to charge tax on the ship to address.

    Obviously, Zen Cart is not set up to do this by default. However, there is good reading in this forum on New York sales tax and a module that calculates tax on the ship to address. Californians could possibly clone that mod and use it- with California rates.

    Here is a thread on California sales tax law:

    http://www.zen-cart.com/forum/showthread.php?t=46091

    If the state of California were serious about online sales tax, then why, I ask, why don't they provide us an API for this?

    That being said, I can say that I've seen the California State Board of Equalization get really nasty and throw down the hammer on a business I worked for about 10 years ago. It was not an online business, but a company that provided a service based in Central California. The services required us to travel to different counties. And we were charging sales tax based on our business address.

    Hoo boy. Everything was fine for years...until we grossed over $1 million in a year...here comes the tax auditors ***and it was not pleasant***

    So the numbers were definitely a clue. Once we hit a ceiling of $1 million, that flagged the state to make sure they get their slice of the pie.


  6. #6
    Join Date
    Nov 2007
    Location
    Burney, CA. USA
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    Default Re: Setting up California Taxes

    Quote Originally Posted by bobdog View Post
    That being said, I can say that I've seen the California State Board of Equalization get really nasty and throw down the hammer on a business I worked for about 10 years ago. It was not an online business, but a company that provided a service based in Central California. The services required us to travel to different counties. And we were charging sales tax based on our business address.
    Indeed, you can get in trouble for that (kind of the point I was trying to make... maybe not clear enough). You must charge sales tax at the rate for the given area (city/county) you are doing business in.

    The loop hole for those doing online business, do NOT own your own truck for delivery-- or only use them for the city in which you are headquartered. As of the last BoE meeting I attended (Januray 2008, in Redding california) if you are headquartered in an area with a lower tax (Shasta County is currently 7.25%) you can charge that 7.25% sales tax to your california customers if ALL of your business is conducted in Shasta County-- it was explained to us that attended, if you hire FedEx, USPS, or UPS to do your deliveries outside of Shasta County, you are still conducting business in Shasta County, even though that package when to Los Angeles because you personaly didn't do business outside of Shasta County, you sold the product to someone on the internet, and hired an independent company to conduct business in another Tax area.

    http://www.boe.ca.gov/sutax/faqtaxrate.htm#5 << that link takes you to what I was trying to explain above (about hiring a carrier to deliver for you).

    Something tells me though, with the budget crunch California is in right now... they will probably close this loop hole for the 2009 Sales Tax year.

    Remember when in doubt talk to the BoE, they are paid to help you understand the laws; and help you collect the correct taxes for your business. you can find a lot of helpful information on their website: http://www.boe.ca.gov

    ***
    Note: I am not a tax professional, all information provided is based on my understanding of information provided on the Board of Equilization website, and siminars I have personally attended held for free by the BoE.
    ***

  7. #7
    Join Date
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    Default Re: Setting up California Taxes

    Quote Originally Posted by DWells View Post
    Under California's laws for collecting Sales tax, states: "You must charge sales tax on Shipping and Handling Charges that are in excess of actual shipping charges"

    Thank you all for the wonderful education!
    Assuming I have the shipping charges correct, how would I apply tax to product and handling fees but not on shipping?
    I am in SoCal.

    Thanks!

  8. #8
    Join Date
    Jul 2006
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    Penryn, CA. USA
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    Default Re: Setting up California Taxes

    To all of the California based stores...

    After much back-n-forth conversations, there is one way that "I" have found to properly tax everyone their proper share, without OVER charging people in Burney using LA rates

    I collected from the BoE, a sales tax csv that went into effect 10/01/08. Then I spent a lot of wasted time adding the Zip Codes to that list, until I find out that the USPS crosses county lines and ruins border guidlines.

    Using ZC's, every slow ( vs importing into the DB Table ), methodical process of manually entering in each county into the Zone system, you can then get close to proper taxation with the Tax Rates. By the way ( Address Line 2 on 1st time signups is called Suburb on the db table, which is what I am using for the 'County' trigger )

    Then when you add the Local Sales Tax mod, you can increase specific CITY taxes based on the shipping address vs the problematic zipcode wandering.

    So far it looks like it will work fine, except I am having trouble with the Priority 1 feature in Zones/Tax Rates because when I attempted to buy $20 worth of items, I had a $60 tax bill, because it added all of the County taxes onto that sale ??

    Why am I misunderstanding adding taxes on the same priority vs compounding taxes with different priorities.. then do each of the 'other' priorities have to be unique from each other to avoid them from being added together too ?? Wouldn't increment resolve this ??

    If anyone wants the California County Tax List and the City Tax List, send me a PM and I'll send them to you.. if enough want them, I'll post them here ?

 

 

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