Tax calculations should not include shipping costs but do

[bobr2k]

Shipping charges should not be included in tax calculations but they are. Has anyone else noticed this? the applicable tax rate is 6.75%
Before ship method is applied I see this:

Order Summary
Subtotal: $36.47
Shipping: $0.00
Taxes: $2.46
---------------
Total: $38.93

After ship method is applied I see this:

Order Summary
Subtotal: $36.47
Shipping: $8.84
Taxes: $3.06
-----------------------
Total: $48.37

Is there a patch available to fix it or an option I haven't chosen?

[compunerdy]

I think that is a debateable issue with some saying it should be included and some saying it shouldnt. I dont know which way is correct myself.

[nickc]

Debatable or not, that's a policy issue. Mechanically, ship methods have a "tax code" property that allows tax not to be applied. Is that configured correctly?

All of my outstanding problems with RC3 relate to this - basket calculations/recalculations are flawed as related to coupons and tax.

-Nick

[bobr2k]

actually it depends on how the law is written ... thanks NickC for this:

Mechanically, ship methods have a "tax code" property that allows tax not to be applied. Is that configured correctly?

it was not ... we had set to "taxable" now changed to blank and working correctly.