online tax on billing address or shipping address?

blackhorse

In united states or canada, for the state or province tax of online sales.

I built up the systems with 4 options like some big off shelf online shops offer too.

1) no tax
2) state tax on shipping address
3) state tax on billing address
4) state tax on either shipping or billing address.

So it covers all the options the merchant can select by himself.

Just for the information, should state tax applies based on billing or based on shipping address?

Some state tax on billing address, some on shipping address, some on both address if the state is applying, depends on different state laws? or it also depends on where the merchants business registrations is, does it have its branches in certain states?

So that is the reason, we as tech guys offer the 4 options in the system the merchant can select on their own?

More and more said tax is on shipping address.

But I remembered that some big online shops charged tax on the billing address. Client in USA has to pay sales tax, but for the same item from the same US online store, if client outside USA order it to shipping to USA address, it was not asking for online sales tax before.

And I saw on Japanese site, that sales tax was on the billing address (if you order from Japan, you have to pay sales tax. if you order from outside Japan, you don't have to pay the tax.)

Or in the beginning, the law charged tax on where the purchase happend which was the billing address, but then due to the online sales special situations, the law changed to charge tax on shipping address now?

You buy a products you pay the sales tax if it is applyable, you ship the product you just buy to another state within the country, you don't pay the sales tax, right? So it makes sense charge tax on billing not shipping right? But why more and more states (of all the states) charge the sales on shipping? Charge on shipping is that because that the online store is registered in this state, and shipping to this state too meaning the purchase happens in this state, so charging on shipping makes more sense?

So? What exactly it is for online sales tax? or as software developer we only offer the 4 options, let the merchant pick which one applies to them? All these 4 options are all possible depends on differet state laws, and let these merchants to worry about which option they would use?

Thanks!

reddrum

After going through a sales tax audit from the state of Missouri, I can tell you this; As a general rule, sales tax obligation is limited to non-exempt, in-state transactions. Out of state, non-exempt transactions are subject to "Use Tax", and that responsibility is the buyer's burden to report. However, you should check your states "Sales / Use Tax" rules, since I am not a sales tax rule expert, but a sales tax rule survivor.

NogDog

I don't know the answer, but that is irrelevant as this is something you should get answered by a tax lawyer or maybe a CPA qualified to give such advice in your jurisdiction. Any advice you get here will at best be a well-educated suggestion, but will not hold up in court as an excuse should it turn out to be wrong; whereas a lawyer or CPA should, as part of his/her service agreement, represent you in case of any tax audit or worse.

blackhorse

I design the modules with 4 options 1) billing, 2) shipping 3) both 4) none. The merchant will based on their tax law or the professional advices they get to pick up which option they use. I just thought there might be a standard answer, billing or shipping address which one should be used. guess it is not.

Well that might be the reason I saw some off shelf systems offer the same 4 options for the merchant to pick up from too.

NogDog

blackhorse wrote:
I design the modules with 4 options 1) billing, 2) shipping 3) both 4) none. The merchant will based on their tax law or the professional advices they get to pick up which option they use. I just thought there might be a standard answer, billing or shipping address which one should be used. guess it is not.

Well that might be the reason I saw some off shelf systems offer the same 4 options for the merchant to pick up from too.

I think it's best to provide a set of options as you are doing, and make sure it's clear in the setup/configuration documentation that the user needs to select the correct option for their particular implementation. The laws may not only vary from state to state, but likely will vary over time as well (or the courts may change their interpretations over time even if specific laws don't change).