Our company has just merged with a company in California, and all of our products will be shipped from the California office. From what I understand, products purchased on the internet and shipped to an address in California will require us to collect the California sales tax. Since the sale tax varies by county in CA, I'm wondering if anyone knows of a product that will do the tax rate mapping for us? (Otherwise it looks like we'll be creating a cross mapping table). Our current shopping cart is home grown and developed in Coldfusion. Any information would be a great help.
I'm not 100% sure on this so you may want to verify it, but I believe the tax rate will be based on where your company is located.
If you were running a real world store, you would charge a single tax rate based on the county your store was in - it wouldn't matter what county your customer lived in. I'm pretty sure it works the same way on the Internet, so you should only need one tax rate.
Just curious though, if your company merged with one that was already doing business in California wouldn't they know the answer to this question?
Check with the California Board of Equalization (donít you love the name). I use the mail order tax rate of 7ľ% and donít worry about the county taxes. You are only required to collect the country and district taxes if you are operating in the bounds of the taxed area.
Using the lower tax rate might not seem like much, other than possibly depriving the state of a few cents. But the real benefit is that your customers in the low sales tax areas donít feel resentful that you are charging a higher tax rate (if you are located in a high tax area). Their resentment is not aimed at the state but at you.
I think paying attention to the little things like this is what builds strong customer relationships.
Regarding what sale tax to change for Internet purchases in California. If the customer lives inside the county that we are physically located, we would charge that customer the same rate as our county. If the customer lives outside the county we are physically located we would charge them the flat 7.25 state rate.
We have been in a similar situation, operating out of Orange County, California, although we ship everywhere. I also just spoke with the Ca state BOE, and was told that I only need to charge Orange County sales tax to shipments delivered in O.C. For all other counties, we can charge a flat rate of 7.25% because we are not "engaged" in business in these counties. We would be considered engaged if we had a facility or sales rep in that particular area, and at that point would be subject to district tax. Publication 73 details this much further.
More reasons why California is a nightmare for small business. We are strictly e-commerce and have had our site set up to charge the LA county rate of 8.25% no matter where we send in California. I'd love to charge less but our shopping cart (americart) only allows us to chose ONE sales tax rate. How does one get around this?
And I just can't wait until they raise it to almost 9% to pay for more services...coming soon.