Taxes for Sales to another state where dropshipper is based

[dmm2020]

I have a question for consideration:

I have a contract offer for me to sell items for a distributor in California. However, since California likes it's taxes a lot, this throws my set up for a loop.

Under California law I would be the TRUE RESELLER. I then must collect sales tax on any sales to Californa residents IF the DROPSHIPPER I used is physically situated in California or has any physical location in California, distribution that is.

I reside and operate in Wyoming, so right now I am setup to collect only WYoming taxes IF I ship to someone in Wyoming.

Now would I set up Zencart if I decide to accept this offer? The accounting side I can program into my software I wrote in Visual Basic but need Zencart to automate the collection process.

Any ideas?

[mprough]

Just add a second tax zone.... The snafu is collecting it on only the California products....

~Melanie

[kobra]

You will also find that California also has 42 tax sub zones that need to be setup

[dmm2020]

I know about california tax sub-zones, but the way I read the paperwork from the California Board of Equalization is I only have to collect and report the state tax, not the local taxes. Keep in mind that I am not in California so I am not responsible for collecting local taxes. Ordinarily, I would not collect California tax at all except that the dropshipper I am considering using is in California. A sneaky loophole in California's tax laws then makes me collect sales tax only on the sales I have this particular dropshipper process.

Setting up the tax zone will not exactly work because here is the catch:

1) Customer shipping address has to be California, AND
2) The dropshipper has to be in California

Otherwise, I have no legal requirement to collect or report the tax. If this can't be set up in Zencart easy enough, I am just going to have to tell the manufacture no thanks, too much of a programming and bookkeeping nightmare.

[kobra]

Setting up the tax zone will not exactly work because here is the catch:

1) Customer shipping address has to be California, AND
2) The dropshipper has to be in California

mprough pointed out the bigger issue - -

What if an order contains a mix of products from differing suppliers??

[dmm2020]

Even more of a nightmare because only the portions from the California supplier would be taxable unless the order was shipped to other than a California address.

Unfortunately, I am just going to have to turn this offer down.

[kobra]

Unfortunately, I am just going to have to turn this offer down.

You would need to quadruple check the law on this BUT If the product line is attractive you could maybe, increase the base price and not charge tax through your portal and only pay the tax through your supplier????

[dmm2020]

The products are very appealing, especially with the warm weather and people wanting to do outdoors tuff. I thought about that too, but then there comes the tax license. At this time, I am not sure I would sell enough of this company's products to warrant about 75 bucks or so for a California sales tax license. Perhaps once I am able to develop a significate sales volume, I would consider it then.

Even if I were to mark up the price to accomodate the tax for California, It would still be a nightmare in book keeping, because I would still have to have to figure out a way to report taxes on products shipped through Californa based dropshippers.

And as cited before, mixed orders would be even more of a nightmare, because only the products shipped through the California dropshipper is taxable for CA tax.