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I am starting a photoprint business and my web site is ready. I am not sure if I have to charge a sales tax to my customers. I live in Minnesota.
Based on my experience as an internet consumer, it seems I have to charge residents of Minnesota a sales tax but not residents of other states or countries.
I would appreciate assistance from someone who has checked all this out.
If I have to collect MN sales tax, how does that all work?
Each state is different when it comes to collecting state sales tax. In many cases you only need to apply state sales tax if the customer resides in your state. Additionally, within many states there are various tax rates according to the county and town the customer resides in. For example, if someone in the state of Colorado buys from me, the tax applied is 2.9%. If the customer lives in Colorado and Summit County, the county in which I live, the tax applied is 5.77%. And if the person lives in Colorado, Summit County and the town of Breckenridge, the town in which I live, the total tax applied is 8.275%. In my senerio, per Colorado rules, sales tax is only applied to the merchandise total and not shipping. Each state is different.
In your PayPal Profile, you can setup your tax table by State and then drill down by Zip Code. The Zip Code allows you to apply various tax rates according to specific location within your state. You can also set the tax to apply to just merchandise total or to merchandise total and shipping depending on your state's tax rules.
It's best to contact your state revenue service to find out anything you have questions on. Once you have all the info you need, you can complete your PayPal Tax Table.
After everything is setup, when a customer makes a purchase on your site, before proceeding to Checkout, he or she enters their Zip code, not only does this calculate the shipping, it includes the proper state sales tax if any. And if needed under certain circumstances, you can override not charging tax in your HTML Button Code.
Note, PayPal's Website Payments Standard Integration Guide explaines how to setup your Account Profile Tax Table. You can find the guide here.
What skier said.
Be advised tho that only yhe base rate of your State Sales tax is collected. PayPal has no system in place to collect any additional 'local tax' a city or county may apply. There is no PayPal system to collect tax based by zip code either. You will be responsible for that additional tax to be paid to your State DOR.
Ditto for setting up Sales tax on ebay.
You can setup a base Tax Rate by State, then drill down by Zip Code as I CLEARLY explained in my previous post.
I stand corrected skier, I did not realize PP added that feature.
HOWEVER it only applies to 5 digit zip codes, not 9 digit.
Unfrotunatly, not all tax districts are defined by 5 digit zip codes.
Myrtle Beach SC is a prime example. Base rate in SC is 6% Myrtle Beach has a 3% city tax. Problem is, the city covers 3 zip codes, and in all three, the city limits divide the zip code.
It's a MESS! Worse, the city counsel is CLUELESS at how eTail works.
Not sure as to what your expectations of PayPal are, as PayPal is NOT a one size fits ALL solution. Believe me, it took two years to convince PayPal that their Tax calculations were not real business world solutions. Once they finally realized that not only each state is different but, there can be different tax rates within each state, we finally made some progress.
Agree, there was no consideration concerning Zip plus 4 at that point in time but, unfortunately there is NO standardization between States as each State is presently different. As you have chosen PayPal for your processor, there's really no reason to complain, if PayPal does not work for you, then move on.
Note, you should be able to find a 3rd party shopping cart that has the tax logic you need and still be able to use PayPal as your processor. The choice is totally yours, as you choose PayPal, they did not choose you.
It's a little more complicated than that.
SST and The Main Strret Fairness Act will be a huge battle in the not too distant future, and I am working to stay informed, as will as make the public aware of the problems vs. legislators who are less informed than you might imagine. If passed, the sellers will need to file Sales Tax returns for 45 States with over 8000 tax districts that are not defined by zip code.
According to PayPal. their default will override the shopping cart settings. Why don't they have 9 digit? over 80% (I'm guessing) of the PayPal customers only have 5 digit zips in their mailing address (my customer DB only has 5% 9 digit)
I use Zen Cart, and the base program only has 1 tax code per state.
Now I just got off the phone with eBay. They CLAIM that the PayPal override will work, so now we have double jeopardy. The eBay site preferences are for State base rates only. The way I see it, eBay generates an invoice based on eBay site preferences, yet when they go to pay on PP, the tax amount will be different. I can see the negative feedback now, and screams of LIAR | CHEAT | SCAMMER .... you know the deal.
PayPal is a great service, and offers many features, and I learned they have a NEW one (you get another kudos vote BTW), and I also recommend them for others to use.
I'll get into faults and problems (PP) on another thread .... but this problem of Sales tax is a big problem for all merchant accounts and eTailers all across the country. Yes, there are a couple on online services, but they are expensive ($30-$50/mo or more), and do not handle eBay/PayPal transactions that I'm aware of.
The solution PP offers is a start. Now to get Legislators to finish the job. My vote is 1) collect Use Tax from the consumer for out-of state sales and 2) exempt local sale taxes for internet sales both for in-state and out-of state
Do read my blog and join the fight :-)
i set up the tax profile to apply to washington state residents. it is showing that it's active, but washington state residents are not being charged. am i missing something?