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  • Sales/Use tax dilemma

    One of our vendors (suppliers) applies sales (use) tax to their products that they ship on behalf for us to about a dozen states. They inform me they are required to do so. No other vendors do this. Now, the dilemma. We have a sales/use tax resell certificate for our home state, but do not for the other states they ship to. So, how can we charge tax appropriately?
    I see there is a "Non-Taxable" field in the products. Is there a Is Taxable" field?
    Here's how I thought we could fix this. Enter in tax manager all the states the drop shipper taxes. Then, put Non Taxable on all the products not related to this vendor. But, how do I tax ALL products sent to my home state?

    Any body have ideas or similar dilemma?

  • #2
    I don't know if it is different by state, or if I am understanding you correctly.

    I think it is weird that your vendor is charging your costomers sales tax. Although, like I said, I don't know if it is different by state. We aren't having this issue with any of our vendors. In my state - I only have to charge sales tax if the ship to is in my state.

    So, is your vendor charging your customer their state's sales tax rate, or your customers state's sales tax rate?
    Last edited by SarahInc; 01-20-2009, 05:42 PM.

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    • #3
      They charge us the "use" tax for the destination state where the items is shipped to. We only charge tax to our customers for the state where we reside. However, vendors of sufficient size, have to collect sales/use tax for certain states. New York is the only state (that I know of) that will waive these charges if you fill out section 2c of this form:
      I am (our business) purchasing Tangible personal property for resale, and it is being delivered directly by the seller to my customer in New York State.

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      • #4
        Well that makes even less sense to me. :confused:

        Sorry, but I am not going to be any help.

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        • #5
          "Sales" tax is a "use" tax. You pay a "sales" tax on items you purchase in your state and "use" in your state. If you purchase from another state you don't pay the "sales" tax to the seller. You are personally responsible, however, to pay the "use" tax for using the item in your state. Obviously, this is NOT enforced to any degree in the United States, except to large companies. The states realize they can't enforce the "use" tax at the consumer level, so, they force vendors shipping product into their state to collect and deliver the "use" tax to their state. Quite clever, actually. The states have found a way to collect taxes they themselves are unable to do so!

          Now, the norm on "Internet Sales" is you only pay sales tax to shipments in your state. However, in our case, the vendor is charging "US" for the product and then drop shipping to the destination. So, we need the ability to charge for this from "our" customer in the 3dcart.

          I hope that makes sense.
          It doesn't look possible with this cart, however. :(
          Last edited by Mark; 01-20-2009, 06:41 PM.

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          • #6
            I know what sales and use tax are. That is not the part that doesn't make sense. Although, according to my state you don't pay use tax on inventory.

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            • #7
              We would need a way to tax ALL products shiping to our state and the ability to tax certain manufacturer's products that are shipping to designated states. The more I look it it, it's not possible. We will just have to raise the price accordingly across the board for that manufacturers products. That hurts in the price reflected on internet searches. Maybe we can add a hidden handling fee that won't affect our advertised price, but, that just ticks off customers. :(

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              • #8
                Got this figured out FINALLY! :D

                As I said earlier, one of our drop shippers charges sales taxes for products shipped to certain states. Not wanting to charge sales tax for ALL our items in those specific states, I turned to the advanced tax manager feature.
                I setup a tax for each of the states the vendor charged tax to ship to. Then, labeled each tax with the label VENA (meaning vendor A). Then, in the advanced tab of those vendor's products, I put in the VENA in the custom tax code field. Then, when a customer for that state checks out, tax is charged ONLY on the items with VENA in the advanced tax code field and NOT on the items from any of the other of our vendors. Works GREAT!
                However, then when a customer from our HOME state checked out, they were not charged ANY tax. So I had to setup two tax rates for our home state. One labelled VENA and the other left blank!
                Hope this helps someone else. :)

                (In the product description for Vendor A's products we include a note: sales tax will be charged for the following states on this item:)
                Last edited by Mark; 01-23-2009, 01:28 PM.

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