Are Sales Taxes charged for virtual product?

[earmsby]

Pardon if this has been answered elsewhere. I did search on a few variants of relevant terms but didn't find the answer.

A client asked me an interesting question that I could not easily answer. He wants to know how sales tax will be calculated if a product is virtual and thus shipping address is skipped. His assumption is that somehow ZenCart will know to use the billing address instead to determine if tax should be charged.

I strongly suspect this is not the case. My assumption is that sales tax will not be added since there is no shipping and the sales tax is figured to be tied to a shipment to a particular territory (state, in this case).

I'm not actually sure he is required to pay sales tax on orders that he delivers electronically but I'm no CPA. He seems to think he is required to pay tax on these orders.

Has anyone run into this? I may set up a dummy product and place a dummy order for it to see what happens. Just thought I might shortcut it by posting here and seeing if anyone has already had experience with it.

[lat9]

If the order contains only virtual products and a product is taxed, it's taxed based on the billing address.

If the order is "mixed", i.e. a combination of virtual and physical products, all taxable products are taxed based on the shipping address.

[earmsby]

Ah, ok. That's helpful. I've since learned that he does not need to pay tax on virtual products after. So am I right that if he does not want to charge the customer tax on the virtual items, he should set up the products as non-taxable goods? If he sets them up as taxable, then the customer will be charged tax if the billing address is in the tax zone?

[DrByte]

To make an item non-taxable, set it to a tax-class that has no tax rates associated with it.