California Tax Rates

I'm helping with a friend's store. They now tell me California has 2 tax rates.

Southern California is 8.25% while Northern California is 7.75%. The store ships from S. Cal - so no tax to other states. It's getting beat up on orders from S. Cal. because the OLD rate was 7.75 for everyone - so they're losing on those.

Does anyone know how to set that up?

There isn't a drop down for zip codes - so I'm wondering how to break up the Tax Zone when there's no way to distinguish it when customers login.

If there is a way to have two tax zones - the customer should have someway to choose.

Any ideas are appreciated.

charlieo

charlieo:

I'm helping with a friend's store. They now tell me California has 2 tax rates.

Southern California is 8.25% while Northern California is 7.75%. The store ships from S. Cal - so no tax to other states. It's getting beat up on orders from S. Cal. because the OLD rate was 7.75 for everyone - so they're losing on those.

Does anyone know how to set that up?

There isn't a drop down for zip codes - so I'm wondering how to break up the Tax Zone when there's no way to distinguish it when customers login.

If there is a way to have two tax zones - the customer should have someway to choose.

Any ideas are appreciated.

charlieoHeh.. I'm working on a New York store, and we have about 20 different tax rates and zones here.. :(

If anyone can comment on this, I'd be grateful. If there was some way to have the customer pick and choose, that'd be great. The tax rates here in NY are NOT based on ZIP-codes either, so I'm out of ideas short of having customers give us their CC info and then we'll process their cards for them (which takes more time on our end).

Thanks everyone!

~MMN Maniac

Try the ot_local_tax mod you can find it here
http://www.zen-cart.com/archived_contributions/order-total/

It was written with California in mind.

Clyde:

I'm going to try it.

I just checked the California State Tax Page at:

http://www.boe.ca.gov/sutax/pam71.htm

It's a snakepit - it's different for almost every county. Anywhere from 7.25 to 8.50 in San Fran - and everything in between.

This could take a while - thanks for the module!!

Charlieo

Sales tax is collected by the county the sale originated in. So, if your store is in S.Cal and you sell to N. Cal you still have to collect S. Cal tax rate. You should have to only set one Tax Zone "California" and set the rate to 8.25

Ahhh - Portman - that is refreshing news!

Will implement one tax for her store!

Thanks,

Charlieo

Before implementing any tax advice, please consult your accountant or tax attorney.

Kim:

Before implementing any tax advice, please consult your accountant or tax attorney.

Agreed!
I have a call into the State Board of Equalization on this one and will post their response.

In NY the requirement is to collect tax based on the customer's location (unless selling directly face-to-face). There are something like a hundred zones - one for every county and many small cities within rural counties, never mind NYC and surroundings.

Most small merchants I have seen or dealt with just use their own tax rate on mail orders - annoying when they're in NYC and want to collect 8.625% instead of my local 8%.... And the sales tax reporting form is four pages long so you can enter the amount of your sales in every zone in the state, for the state's fiscal year instead of the calendar year. =P

charlieo:

Will implement one tax for her store!

Charlieo, definitely check with BOE since I am also in CA and was told the same thing that gjh42 says they have to do for NY.

In CA we are supposed to collect tax based on the county/city tax rate of the customer's location. I was told this when I got my reseller's license but I would recommend that you check to be sure.

cpk

Here is the response I received from the BOE:

The rate you charge depends on two factors. 1) where title to the goods passes to the buyer (usually this is the shipping destination) and 2) whether or not you are "engaged in business" in the area where the goods are shipped. If you are not engaged in business in the particular area where you are shipping, you are only REQUIRED to charge the statewide rate of 7.25%. If you charge everyone 7.75% you will be overcharging some customers, and possibly undercharging others.

You are never wrong to charge your customers THEIR sales tax rate.
Whether or not you are REQUIRED to charge their rate depends on the two
factors I mentioned in my answer to your first question. You might want to
download Publication 105, District Taxes and Delivered Sales, by clicking on
the link below.

http://www.boe.ca.gov/pdf/pub105.pdf

So, I think a "statewide rate of 7.25%" is ok, but check yourself to be sure.

Here's another question.. how do u set it in Zen Cart such that only certain orders (e.g. based from NY) will get taxed, but others will not be taxed?

Thanks everyone!

~MMN Maniac

Based on the location or the type of product or the customer?

Kim:

Based on the location or the type of product or the customer?
based on the location of the customer. If s/he's in NY, i'm obligated to charge sales tax :(

BTW, someone mentioned that u wrote a plugin/mod to make the Login | Home | my Account bar appear in a sidebox instead, but I can't find it under downloads (only found a related one by a "Jose Antonio Suarez" - is that it?)

Thanks Kim! :thumbsup:

~MMN Maniac

http://www.zen-cart.com/forum/faq.php?faq=zone_tax_cfg FAQ on setting up taxes.

California has a state tax - 6%, a combined state and local tax of 1%, a county tax of .25%, and then one or two of approximately 84 different districts collect their taxes. If you are in California selling your product to Californians, you collect the applicable sales tax in the district in which the sale took place - the customer's district, not yours.

When you file your sales tax return, you have to break down your sales by state, state & local, county, and district. It is not enough to charge an aggregate amount, because the form has you put the total amount of sales in EACH district. Even though each county generally counts as a district, some cities and localities within those districts are their own districts, and you collect tax for them, too.

When it comes to collecting sales taxes, the California State Board of Equalization makes the collection arm of the IRS look like a bunch of fluffy teddy bears. DO NOT CROSS THEM. Their philosophy is that you have a fiduciary responsibility to remand on a timely basis the taxes you collect on the state's behalf. The state has no qualms whatsoever about going in and seizing the funds in your checking accounts until they are satisfied they have all that's coming to them. No 30-day notices like the IRS gives you.

Certain products and services may or may not be taxable. The state has publications, including audit manuals (they love to audit people), that will explain in a way you can barely understand what is taxable or not.

If you are tempted to ignore them and do what you want...I don't suggest it, especially since all sorts of national, state, and local agencies are sharing financial information with each other. If they don't know now, they probably will later, then you'll have penalties and interest tacked on.

I'm not an accountant, although I do the bookkeeping and taxes for my business, I've been an A/P and full-charge bookkeeper, and I've sailed through my accounting class. I don't work for the state. I'm not a tax attorney. I've been on the wrong side of the BOE, and it's a place I never want to visit again.

Now, based on the above, is the Zen Cart sales tax module up to the requirements of the state?

I helped install and create a clothing / custom embroidery shop web site using Zen last year. They are here in California. I am also ( I should say WAS a ) book keeper full charge with my degree for 15 years.

I do remember that our zen cart was set to charge the tax based on location in California, though we only had it set up for either 7.25% or 7.75% it did work the way it was supposed to.

Unfortunately that site thought they outgrew zen and they went to a commercial application for their site, and the last version of zen I had installed and running was 1.2.7 (I think) and I really don't remember how we set it up - we may bave paid someone to mod Zen.

So I know that it IS possible - unfortunately I cannot for sure tell you how :(

How would I find out? I seriously need it to at least separately track sales in each sales tax district.

PortMan:

Sales tax is collected by the county the sale originated in. So, if your store is in S.Cal and you sell to N. Cal you still have to collect S. Cal tax rate. You should have to only set one Tax Zone "California" and set the rate to 8.25
As the former holder of a California state sales tax permit this information is** totally incorrect.** The sales tax is based on the location where the goods are delivered. It's your rate if they pick up at your store. It's the rate of their county if you ship it to them. The sales tax reporting form has an entry for each county you sell to in order to report the correct amount for each county. (This presumes they have not changed the way the form is set up, I haven't been in california since 1988.) You can always overcharge by imposing the highest rate provided the state gets the money, they're not going to complain that they are getting too much (nor will they really know you're paying the wrong amount unless they audit you, and unless you're a politician or a large business you're unlikely to be audited. (The Franchise Tax Board, having auditors on staff, does auditing of politicians income and expense reports for proof they have disclosed everything instead of the Secretary of State having to do it.))

I apologize for not being clearer about the delivery of goods, but I'm assuming that if one is offering a shopping cart, that the goods will be delivered to the customer's location.

The State Board of Equalization audits small businesses. They do it often enough. I know of two small businesses personally - one owner is a very good friend of mine - as honest as the day is long; the other a Christian printer I worked with. Both were exonerated. Both went through a period of living hell as their paperwork was gone over with a fine-tooth comb.

If you collect too much in sales tax, you have to return it - a bookkeeping nightmare. BTW, I asked the BOE, and that's what they told me. All it takes is one customer complaining to the BOE to instigate an audit. Do you feel lucky?

By the time you finish filling out the tax form and breaking out each item, you will immediately know if you've collected too much in sales tax. Your math will not add up, from what you've collected, to what you have to remand to the state. If you want to be dishonest in your business dealings, that's one thing, but if you do your bookkeeping correctly, you will know.

In order to fill out the form, you must track those sales in each of those districts. There are approximately 84 districts, and some are districts within districts.

The state board of equalization, while under the auspices of the Franchise Tax Board, is its own unit with its own auditors.

I've been doing business in the state of California, selling to mostly Californians, for 35 years. I've also read the auditor's manual for my business type cover to cover. I also do my own taxes.