US Sales Tax 101

[Netfinity]

Hi,
We are rolling out a site that will ship out of Phoenix, AZ to the US and International addresses. As we are developers based in New Zealand (working for a US client) we are only semi-familiar with selling goods from a US based location and the tax ramifications involved. Some online stores add a sales tax, others do not seem to. Apparently in AZ we DO need to add a sales tax.

My question is, what is the best way of handling sales tax in AC7? Are we best to use a third party web service? Do we manually configure each state, county, city, zip? Are we best to build the sales tax into the price? Is this even legal to do that? Is there an easy way of handling this? What are the AC7 best practices for tax config?

Thanks in advance.

[sdlong02]

General tip, as far as I know, the sales tax is only applied when selling in your state of operation, so the business being based in AZ only has to tax customers purchasing who are also in AZ. This varies from state to state so you'd probably have to ask the AZ based business about their tax laws.

To add to the confusion, for California, tax changes per county, and zip codes can cross between different counties.

[AbleMods]

My understanding is that you are only required to collect state sales tax if the purchase is shipping to a state in which you possess or operate an office. If you have an office in AZ, then you would be required to collect AZ sales tax on shipments to AZ addresses. All other addresses would not require sales tax collection.

How that tax is accumulated varies from state to state. In Indiana, we have only a state-wide tax of 7%. However other states like NY, California and Ohio has additional county, city and even address-based tax rates that apply. It can get pretty ugly - rumor has it Ohio is one of the worst.

However you are far better off asking tax accountant (preferably one in the state in which you do business) than a web forum of developers and website admins. Ultimately you will be legally and financially responsible, so an accurate answer is pretty important.

[Netfinity]

Thanks Joe,
Yep we have accountants on the case too.
Cheers

[KCarlson]

I am not sure about the exact rules in AZ, but I did some research for CA. Here, you collect the local tax for the county from which you operate. For the rest of the state, you collect the prevailing state-wide sales tax. So if you operate out of Burbank, you collect whatever the LA county sales tax is, because Burbank is in LA county, so all sales to zip codes in the county. Other then that, for CA you collect 7.25%, which is the prevailing CA tax. I could point you to the tax codes that talk about this, but it is for CA tax, so not sure that would do you any good.