How sales tax should be calculated in the US & Canada ???

"The Night Blogger" wrote

Well, you have tons of code to write, as there are differing rate on different items and/or services. And, luckily for your writing fingers, they change - often as often as quarterly.

Whether sales tax applies to a given sale is a matter of state and local law. In general though, sales to out of state customers, when the goods are shipped, are not taxed with in-state sales tax. However, if you were to go to MA and provide services or deliver the product, then that states sales tax applies. Along those lines, if the MA customer were to come to you to get services or pick up the products, then CA sales tax is applied.

This is not a simple 'one-line' of code you have to write.

Most billing programs allow for the application of a tax to the services or products the user enters. Of course, given the various users situations, they can easily exempt tax from a specific product or service.

Thanks for the feedback Paul, I'm aware that it's not a single line of code. I will provide a list of State (for the US) and Province (For Canada) so the user can modify the Tax rate when those change, so it will be flexible

I just wonder where I can find the algorithm or process for determining the Tax Entries I should generate. Mainly for Canada which seems more complicated than the US since there's federal, provincial and governement tax it's seems a bit tricky.

"The Night Blogger" wrote

Very. Even in the US there are state rates and county/city rates and multiple jurisdictions that you would report and pay to.

Why not allow for a tax rate to be applied based on what the user enters, that relieves you of liability for keeping the rates up-to-date.

Should I just the have ONLY one field called "Sales Tax %" (for each sales line)

And the user will manually enter the correct rate based on their state (check rate below)

This seems to simple to be true :-)

For the USA:

If your company is based in state X and has no business presence in states Y and Z, then you must collect and remit sales tax sales in state X and not in states Y and Z. Customers in states Y and Z should file use taxes. In some states, services are not taxable.

Furthermore, some customers will be tax exempt, so selling to a tax exempt customer in state X would cause you NOT to collect and remit sales tax. One must evidence the tax exempt status in an audit.

Thus far, an internet presence does not constitute a business presence in another state.

IF you design your code for the customer to put in a rate and you collect it, you WILL be responsible for remitting it to the proper agency. This would be a nightmare.

Sales taxes are calculated based upon the point of sale; hence, if a person from state Z comes to state X to pick up goods or receive services, state X rates apply. If goods are shipped from state X to state Z, state Z rates apply, but are not collected by the merchant and must be remitted by the customer as use taxes.

USA sales taxes are anything BUT simple. Beverly

Also, there are multiple jurisdictions within the same state, i.e., Philadelphia sales tax is different than other parts of Pennsylvania; certain counties in New York are different than others. So you may be able to find a table that has rates based on the zip code rather than the state as a whole.

"Meyer1228" wrote

While you may be "close enough" using zip code data, some cases the zip cods is the same for more than one county, and if the rates are different for each county, then you could be imposing not enough, or to much.

Plus, if you have to remit the tax, you could easily be sending it to the wrong place.