Separate State vs City Sales Tax

Talon H. shared this question ago

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My state charges sales tax on everything related to our business, but I was informed by the sales tax agency that I've been paying city tax on my delivery and setup fees which are exempt from city tax (not state).

I want to have those fees taxed at the correct amount, but I don't know of anywhere in IO that can accommodate special tax for certain items/fees. The closest thing is being able to choose whether a delivery method is taxed or not, but that's only semi-related.

What is everyone else in Arizona doing (assuming your cities also use MCTC § -450(c)(6))?

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Comments (1)

Tim B. ● 14 days ago

No one has ever asked that. Dealing with taxes is difficult. There are not many great options to deal with this. One I can think of is to manually input your state tax rate so we use that for everything and then setup a fee to tax based on the city and items. The big issue is you would have to make one for every city.

Another option is to set delivery and setup fees not taxable and then make a fee that adds the state tax just for those.

Remember you are not paying extra. You are collecting extra. So at best it will reduce the cost to your customers. It may not be worth it to you.

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Talon H. ● 12 days ago

After I posted I realized I mistyped--the setup/delivery fees are taxable in AZ, it's the attendant fees that are only state-taxable (city-exempt). Small but significant difference there.

I know I'm doing extra work here to save my customers money, but it's painful to see it all add up and know that I'm essentially tipping the government out of people's hard-earned money. I'd rather it stay in their pockets.

Assuming there's no baked-in option, my plan is to set up an automatic Promo that applies pre-tax (or "taxed" in IO) to Staff Costs at the rate of 2.31% off (that way when it's taxed at 8.1% the effective rate is 2.5% off). Then I've collected the correct amount in IO and I can edit the synced QB invoice to report the tax correctly.

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Tim B. ● 11 days ago

You could use the fee option like I mentioned for staff costs as well I think. Sorry I don't have a better option, but it sounds like you have a reasonable plan.

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