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.

alma1:

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.

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.

alma1:

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.

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.

:cry:

bobdog:

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.

DWells:

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!

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 :P

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 ?? :shocking:

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 ?? :no:

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 ?

I would like a California County Tax List and the City Tax List.
Thanks

Do you mean this list?
http://www.boe.ca.gov/pdf/pub71.pdf

j_boo:

Do you mean this list?
http://www.boe.ca.gov/pdf/pub71.pdf

Actually no, J_boo.. If you continue your research around BOE, you'll find, as I did, that they actual provide CSV files with the data already in a configurable format, so that you don't have to manually type all of that into a usable format. I found the files, compiled them with the USPS zipcodes, then found out that the zipcodes had no value, because they wander across county lines ??

I also just read a couple of tutorials in ZC that lead me to believe that ZC only works with one tax rate, as DWells explained above. All of us hire carriers to take our packages to our customers. Our transaction is in the county and/or city that we have our warehouse or store within ? Correct ?

Unless someone wants to write a couple of lines to grab the 'ENTRY_SUBURB' data out of the 'ZEN_ADDRESS_BOOK' to trigger the tax rates to work with individual county tax rates, I'm not going to fight it any more. Until the Tax man comes out and says that I need to collect taxes based on each county that I ship to, I will be satisfied with my single rate.

The attachments are by request for Cheryl11 and anyone else who may find value to them.

In the combination file, there are 1546 Cities listed for California, with their associated counties, the zipcodes used for each location, including multiple zips for the larger metro areas and the tax rates for each and all. ( NOTE: It turns out this file is too big to attachment, send me a direct email and I will return it to you : Toby at BetterThanNaked dot net )

There are 58 county only tax rates in their seperate file.

There are 93 cities listed in their seperate file, which have the higher tax rates, than the county they reside in. I think this is where the mod from LadyHLG "Local_Sales_Tax" may work best ? Upcharge what you can and eat the rest ? We all need writeoffs anyway.

I hope I confused none, I hope it helps some ?

-Toby

Sales tax in CA doesn't compute correctly for certain amounts - it's almost always off by a few pennies because tax is being computed on each item separately. This is completely wrong. It should be computed on total items. Why has this not been addressed and how do I change it?

I emailed the BOE and they said if I ship from my store and no place else, I can just charge the flat state tax of 7.25%. Sounds good to me! :smile:

They also said I'll need to tax the handling fees. Has anyone figured out how to add a handling charge & tax it without taxing the shipping? Ideally it should be a separate line item on the invoice.

Product Price
Handling Fees
Tax
Shipping
Total

I can't see how to do this in ZC tho.

Tweebe,

Your list only has one tax rate per county. How can you use this when many counties have more than one tax rate?

Have you gotten your CA taxes to work yet? Have you tried the Local Tax Mod? I'm pulling my hair out.

So frustrated.
This is my understanding of how the taxes should be entered.

1. enter zones like Calif - Los Angeles for EACH COUNTY
2. Define zones for EACH COUNTY
3. enter EVERY tax rate for EACH COUNTY
4. hook the Definition to the Zone for EACH COUNTY
5. Enter the Cities for EACH COUNTY and EACH TAX RATE. So for Los Angeles County where you have 3 tax rates you have to do 3 City List entries.??
   This is so messed up!

Has there been a resolution to this issue of tax on handling but not on shipping?

Seems to me that it complicates setup but in the end, may be a necessary evil given that these are separate items and treated differently in each taxing area.