PayPal adds sales tax to ALL purchases - out of state/nationwide and even internationally

[JuliaChloe]

I have been trying to fix this frustrating sales tax issue for months:

I set up a merchant account for a client and configured the shopping cart to calculate sales tax and shipping based on recipients' address.

After the first couple of purchases came in, we realized that only CA residents were charged sales tax (online business is located in CA), but the sales tax amount also got slapped on purchases made out of state - and even to every international purchases!

When I check profile settings (Hosted payment settings > VAT), everything is set up correctly: only CA sales tax is listed.

Since I couldn't figure out the issue, I even tried deleting the sales tax configuration - now NO sales tax rate table is listed, BUT Paypal will still add sales tax on a test purchase.

Frustrating - especially since calls to customer support get ups nowhere.

We just receive instructions how to set up sales tax (& have followed these instructions) ...

Anyone else out there with this issue?

[PayPal_RobG · Accepted solution]

Hi,

Please file a ticket with Merchant Technical Services at https://www.paypal.com/mts/

Remember to include the full link to your website when filing the ticket.

I suspect your website is also adding sales tax to the amount to be charged; that would explain why it's appearing for all orders.

Does the sales tax show up as soon as the buyer lands on the PayPal page, or is it only visible on the 'Review your payment' page?

In case it's the former, this would most likely be your website sending us a fixed tax amount.

In case of the latter, we'd need to investigate this further.

[JuliaChloe]

Thanks, Rob!

Your suggested fix via the support ticket for Merchant Technical Services did the trick!

I just wanted to share your repsonse in the forum, in case someone else has a similar issue:

it turned out the PayPal button was set to a fixed / static tax rate within the configuration of our PayPal account.

To resolve this, just follow these steps: 
- Navigate to https://www.paypal.com/ and log in to your account.
- Click on "Profile"
- Click on "My selling tools"
- Find "PayPal buttons" (top of the list called 'Selling online') and press "Update".

In here, find which button is the one in use on your website.

You can usually recognize it bay the name.
Once you found your particular button:
- Click "Action" followed by "Edit button".

In the next screen find the "Tax" header and adjust the tax accordingly.
Note: You could perhaps also have submitted some 'advanced variables' to set the tax rate. You can find these clicking on "Step 3: Customize advanced features (optional)".

Once you've changed everything, click "Save Changes" to save the changes.
These will take effect immediately. You will not need to re-copy the code of the button over to your site.

Again, thanks Robert for figuring this out!

Julia