{"id":14550,"date":"2018-07-06T08:00:32","date_gmt":"2018-07-06T05:00:32","guid":{"rendered":"https:\/\/www.x-cart.com\/?p=14550"},"modified":"2024-07-17T14:47:39","modified_gmt":"2024-07-17T11:47:39","slug":"ecommerce-sales-tax-x-cart-taxjar","status":"publish","type":"post","link":"https:\/\/www.x-cart.com\/blog\/ecommerce-sales-tax-x-cart.html","title":{"rendered":"eCommerce Sales Tax for X-Cart Merchants, Demystified"},"content":{"rendered":"\n

This blog post was originally contributed by Mark Faggiano, the Founder and CEO of TaxJar<\/a>. <\/em><\/p>\n\n\n\n

eCommerce sales tax is one of those administrative hassles that can quickly turn into a mess for online sellers. In the U.S., no overarching government body handles sales tax, so businesses have to deal with different tax rules and tax laws from each state.<\/p>\n\n\n\n

Not to mention, sales tax rates vary widely from state to state and even city to city. There are different tax rules for in-state and out-of-state (i.e. \u201cremote\u201d) online sellers. Some states collect gross receipts tax instead of sales tax.<\/p>\n\n\n\n

If you\u2019ve ever tried to search for comprehensive info on \u201ceCommerce sales tax\u201d or \u201conline sales taxes\u201d you probably already know there\u2019s a lot of information out there. And it\u2019s difficult to determine what\u2019s relevant to your business.<\/p>\n\n\n\n

That\u2019s why we put together this quick eCommerce Sales Tax 101 guide to help online sellers handle their business tax. It will be useful both for those who already sell online and who are just creating an online store<\/a>. Read on to demystify the wild world of internet sales taxes.<\/p>\n\n\n

\n The Anatomy of a Sales Tax Rate <\/h2>\n\n\n\n

Forty-five states and Washington DC all have a sales tax. Sales tax is a small percentage (usually 4-8%) of a sale collected by a merchant and passed on to the state or local area. The money collected by sales tax is used to pay for public budget items like schools, roads, and public transit.<\/p>\n\n\n\n

Some states only have one statewide sales tax rate. For example, Connecticut\u2019s statewide sales tax rate is 6.35%.<\/p>\n\n\n\n

But most states allow local areas like counties, cities and special taxing districts levy a sales tax, too. And that\u2019s where sales tax collection can get complicated for online sellers. In most eCommerce transactions, the point of sale is your buyer\u2019s ship to address. And in states with local sales tax rates, that rate can vary widely from town to town and county to county.<\/p>\n\n\n\n

For example, the sales tax rate in midtown Atlanta, GA is 8.9% while the sales tax rate in neighboring suburb Marietta, GA is just 6%. And in some cases, a resident who lives outside the city limits would pay less in sales tax than a resident who lives inside city limits.<\/p>\n\n\n\n

You get the picture. It can be difficult to determine your eCommerce buyer\u2019s correct sales tax rate without a service like TaxJar SmartCalcs<\/a>.<\/p>\n\n\n\n

But before you even begin collecting sales tax in your online store, it\u2019s important to know the basics of which merchant has to collect sales tax where. That\u2019s where the concept of \u201csales tax nexus\u201d comes in.<\/p>\n\n\n

\n Sales Tax Nexus, Explained <\/h2>\n\n\n\n

In the U.S., due to Supreme Court precedent, only sellers with \u201csales tax nexus<\/a>\u201d in a state are required to collect sales tax from buyers in that state. Nexus is just a legalese way of saying a \u201csignificant presence\u201d in a state.<\/p>\n\n\n\n

The following factors generally create sales tax nexus:<\/p>\n\n\n\n