Creating custom tax rates and sales tax holidays
At times you might find it necessary to override the default tax rates for products or shipping charges in a state. To create a custom tax rate, select from the menu.
• Custom tax rates for products
• Custom tax rates for shipping
• Sales tax holidays
Custom tax rates for products
In some states certain types of products have a lower sales tax rate or don’t attract sales tax at all. For example, in Massachusetts many types of clothing priced under $175 are exempt from state sales tax.
If you sell products that have a different tax rate to the default in any state, then you can create product tax overrides for those products.
When creating your product tax overrides you can choose to apply them to whole categories or individual products. If you select a category to apply your custom tax rate to, you will want to ensure that every product you have placed within that category qualifies for the tax rate that you enter.
Please note!
The ShopWired support team cannot tell you which of your products are exempt from tax or have lower tax rates in any state. If you are unsure if a product qualifies for a lower rate or exemption or what the tax rate should be for a product, you should consult a tax professional prior to creating your product tax overrides.
On your taxes page scroll down to the ‘Product Tax Overrides’ section:
Select add a product tax override to create a tax rate. In the box that appears select the state that you want the rate to apply to (only states that you have created a nexus with will appear in the list):
You can only choose one state per override. If you need to create custom tax rates for multiple states, you will need to enter them separately.
Add a name for the product tax override. This will be used in the sales tax report to help you distinguish this tax rate from others. Then enter the tax rate that should be charged for the selected products/categories. If tax should not be charged, enter 0 in the box.
Then under ‘Target Type’ select either ‘Product’ or ‘Category’. Type in the first few characters of your category or product and then select it from the list. To add multiple categories/products to one product tax override select + add another as many times as you need.
If your categories need to have different custom rates for a specified state, you will need to create separate overrides.
You should only create one product override per state for a product. If you create multiple overrides in the same state for one product, then the override which was created first will be applied to the product and all others will be ignored.
Helpful tip!
If a product is tax exempt everywhere that you will sell it, then, when creating/editing the product, you can mark it as exempt from sales tax. To do this scroll to the 'Product Pricing' section and put a tick in the box beside 'Yes' for 'Is this product exempt from sales tax?' This can be a quicker alternative for you than having to create multiple product tax overrides.
Select add product tax override to add the tax rate to your account.
Once you have created a product tax override it will immediately be active. You can edit, deactivate or delete it at any time.
Custom tax rates for shipping
If you need to override the shipping tax rates for a state, use the ‘Shipping Tax Overrides’ section to create custom shipping tax rates:
Select add a new shipping tax override to get started.
In the box that appears choose a state from the list (only states that you have created a nexus with will appear in the list):
You can only choose one state per override. Then add a name for the override which will be used in the sales tax report to distinguish this tax rate from others.
Then enter the tax rate that should be charged for shipping for that state.
Please note!
Adding custom shipping tax rates to a state will apply that tax rate to ALL shipping charges for customers who enter an address in the selected state.
Select add shipping tax override to add the tax rate to your account.
Once you have created a shipping tax override, it will immediately be active. You can edit, deactivate or delete it at any time.
Sales tax holidays
Many states offer certain short periods in the year where sales tax is not charged on products that it normally would be charged on. For example, many states offer a sales tax holiday on school supplies and clothing prior to the beginning of the school year.
If you offer products that are exempt from tax during the dates set by the state, you don’t need to (and shouldn’t) charge sales tax to your customers. You can use the ‘Sales Tax Holiday’ section to easily turn off sales tax within a certain timeframe for certain products or categories in specified states.
In the ‘Sales Tax Holidays’ section, select add a new sales tax holiday:
In the box that appears, select a state to create a sales tax holiday for (only states that you have created a nexus with will appear in the list):
Use the ‘Start Date’ and ‘End Date’ date pickers to select the dates of when the sales tax holiday should take place.
Under ‘Target Type’ select either ‘Product’ or ‘Category’. Type in the first few characters of your category or product and then select it from the list. To add multiple categories/products to one sales tax holiday select + add another as many times as you need. Then select add sales tax holiday.
Warning!
It is your responsibility to make sure that you are utilizing sales tax holidays appropriately. Improper use (such as placing sales tax holidays on products which aren’t exempt) could lead to you not paying tax that you should be, which can lead to financial consequences for your business. The ShopWired support team cannot assist with the specifics of what sales tax holidays are taking place in different states and how that would affect your business. If you are unsure if your business or your products are eligible for a sales tax holiday, then you should consult a tax professional.