[GNC] Automatic sales tax

Mon Feb 28 12:57:47 EST 2022

I can lay no claim to being an expert where sales tax is concerned.  Your comment caused me to research how many states are origin-based, and it turns out the number is eleven.  So you are correct that the majority are destination-based.

Online sales have clouded this issue because states have reacted to the loss of revenue from remote businesses by changing their sales tax laws on nexus.   A business may have physical nexus or, alternatively, an economic nexus that obligates them to collect tax for a particular state where their products are delivered.  I believe the laws are sometimes based on a certain volume of activity, which is a complicating factor in collection when the business is not certain of crossing that threshold.  But, I'm prepared to agree that most states may be destination states where online sales are concerned.  Consider the confusing situation if your business is located in an origin-based state but has nexus out of state!

Making the buyer the determination of sales tax jurisdiction is an onerous complication for small business, to say the least.  Gino's Pizza's one and only shop may deliver across the county line, but I'm willing to bet they don't collect sales tax accordingly.

The number of sales tax jurisdictions in the U.S. alone runs to the tens of thousands, a few of which have quirky bracket schemes that are more complicated than simple application of a percentage.  Some have on and off surtaxes.  Then, too, some states declare brief sales tax holidays for one reason or another.   And whether or not they tax shipping and/or a particular type of service are yet further complexities.

I was mainly just reacting to how unthinkable it is that GnuCash doesn't automatically calculate sales tax.

-----Original Message-----
From: gnucash-user <gnucash-user-bounces+john.layman=ieee.org at gnucash.org> On Behalf Of Sebastian Naumann
Sent: Monday, February 28, 2022 2:51 AM
To: gnucash-user at gnucash.org
Subject: Re: [GNC] Automatic sales tax

Hi John,

sorry, but I tend to disagree with your statement that "[...] most states consider the location of the seller to be the nexus...". Actually the second part of the statement is correct: Most states are destination based, meaning the location of the buyer is relevant. There you will have to keep in mind the economic nexus thresholds as well, meaning if you have x transactions / $x of Gross sales per a certain period in the destination state, you will have to register there.

Have a great day and please correct me here if you believe that I am wrong.

Am 2/22/22 um 9:58 PM schrieb John Layman:
> A further complication in calculating sales tax is that there is no uniform law regarding nexus.  Whereas most states consider the location of the seller to be the nexus, there are others where the nexus is that of the buyer!  In Florida, a seller in Okeechobee shipping an alligator skin wallet to a buyer in Pensacola is supposed to charge sales tax at the rate of the buyer's location 600 miles away.  And, if the purchase was made from an online store whose owner was in Baton Rouge, same thing.   Sales tax is one reason there is a difference between point-of-sale systems and accounting packages.
>
>
>
> -----Original Message-----
> From: 
> gnucash-user<gnucash-user-bounces+john.layman=ieee.org at gnucash.org>  
> On Behalf Of Adrien Monteleone
> Sent: Monday, February 21, 2022 12:45 PM 
> To:gnucash-user at lists.gnucash.org
> Subject: Re: [GNC] Automatic sales tax
>
> Yeah, without a receipt in hand (or electronic) showing the breakout, no software can assume or guess reliably. That is just insane.
>
> In my state, you can have one location in one jurisdiction depending on what side of the street it is on, and the two properties to the left and right can each be in other separate districts. And then, you have to take into account purchasing location vs. delivery, and then the type of item or service.
>
> That is impossible for any software, paid for or not, to 'guess' based merely on a description containing a business name.
>
> Even if you pre-specified what each business you buy from charges, you 
> might end up getting it wrong. (my grocery receipt for example charges 
> one rate for food 'for home consumption' and another for everything 
> else, and those subtotals of course vary from purchase to purchase)
>
> And that doesn't even scratch 'tax holidays'! (or that local rates can 
> change 4 times a year!)
>
> Regards,
> Adrien
>
> On 2/21/22 9:00 AM, Michael or Penny Novack wrote:
>> On 2/20/2022 7:58 PM, David Carlson wrote:
>>> Here in Illinois it varies by county, city, merchandise category, 
>>> service category, seller category and sometimes by such arcane 
>>> variables as library district (well, that last one may be a slight 
>>> exaggeration).
>> And not only is it that complex, but the DATA (what IS the 
>> jurisdiction that applies) is typically not available. Almost always 
>> the information by the vendor, just the postal address.
>>
>> For example, while my town (township) does indeed have a PO with zip 
>> code 01338 that post office delivers no mail (just for PO boxes 
>> inside that post office). On the other hand, four different post 
>> office with zip codes 01330, 01339, 01340, and 01370 do deliver mail 
>> to addresses located in my town. So EVERY street address in my town 
>> has some other town in the address << well one of those isn't a 
>> "town" but a village on the boundary of two towns (townships) >>
>>
>> There was a period during which when writing a letter to my 
>> Congressman I had to make it very clear, "Yes, I AM a constituent 
>> living in your district in spite of appearances" (the "town" on my 
>> address was outside his district)
>>
>> And I can think of a merchandise category/seller category tax 
>> difference in my state. Buy a pair of gloves (clothing, not taxed) in 
>> a clothing store/department store vs buy the SAME pair of gloves 
>> (protective gear,
>> taxed) in a hardware store.
>>
>> BTW --- usually responsibility for figuring sales tax is in the POS 
>> system, not the accounting package being fed by POS (POS would also 
>> interact with the Inventory system). The accounting package is just 
>> one part of an "integrated business system".
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