MrPhil, on 27 December 2010 - 07:31 PM, said:
When you say "My supplier", does that make you legally bound to collect sales tax in those 36 states? It depends, on a state-by-state basis, whether you are acting as an "agent" for them, or if they are drop-shipping for you, or what the situation is. If they merely wholesale to you, and you do the selling and shipping to customers, you would only have to collect sales tax for the state(s) in which you have a nexus yourself (your wholesale supplier doesn't enter into the picture). It gets more complicated if they are shipping direct to your customers (drop ship), or if you are an agent driving business to them and collecting a commission (in which case, you may be able to defer sales tax calculations to your supplier's site). Unless this is the first time they've entered into such a sales program with Web sellers, they should be able to tell you where and how you have to collect sales tax -- don't assume that simply because they have warehouses in 36 states that you have to collect sales tax in all 36 -- it depends on state sales tax laws.
If you do have to collect and remit sales tax in all 36 states, you're going to have a job on your hands. Different states have different rules for everything. Some will let you look up by ZIP Code, while others require a specific address to tax jurisdiction mapping. Some provide online address or ZIP lookup services, while for others you're on your own (find a commercial service to do it for you). Some even let you use one rate (the location of the shipping point) rather than the destination address. And of course, there's no consistency on what products are taxable and which aren't (even within one state)! In one state, a single can of soda might be taxable in one jurisdiction, and not in another, while a six-pack is taxable in both. In some states, candy or snacks are taxable, while in others they're considered non-taxable food.
If states don't get their act together (ha!) and harmonize their sales tax collection process (uniform rules) so it's easy for online merchants to figure out tax rates that apply, and do something to enforce sales tax collection on out of state orders, they're going to watch all their brick and mortar stores fail, causing massive economic disruption. Right now, all states with sales taxes rely on voluntary reporting and remittance of "use tax" for out of state sales to their residents. That's right -- shopping out of state (Web, phone, mail) is not tax free, but most people are evading the law by refusing to report purchases.
I would think that osC could handle 36 tax zones, although I haven't tried that many myself. Third party tax calculators might be a solution, although that would probably take some modifications to osC to invoke their services.
Thanks for the reply. Mr. Phil
When I said "My Supplier" Yes it does make me legally bound to collect sales tax in those 36 states, because my supplier has a presence in that many states, they are charging me sales tax for the shipping address of my orders, for instance, my office is in Tennessee, last month I received an order from NC, I forwarded the order with my main supplier in Baton Rouge La, the ordered item was out of stock, Baton Rouge ordered the item from their Dallas warehouse, The order was shipped from Dallas to North Carolina, I was charged North Carolina sales tax. I did not charge sales tax and lost $72.00.
BTW: the supplier has a nexus in NC also; therefore he has to charge sales tax for that state.
I want to be able to charge the tax in my oscommerce tax module; As of late, I had to raise my product prices 10% to cover the sales tax therefore making my products much higher than my competition. I know each state has different laws regarding sales tax, no one has read more about this subject so I am well versed on this tax.
I need to be able to charge my customers the right sales tax for their shipping address (not billing), and then pay that tax to my supplier when I’m billed. I don’t want to have to pay the tax to each state, let the supplier do that, it makes it much simpler.
We will some day pay sales tax to all states as soon as the states can come up with a program where each will get their rightful share. I understand the brick and mortar shops having to pay sales tax and now most Internet sites don’t but that is going to change.