United States Taxes & Origin and Destination Based States

United States Taxes & Origin and Destination Based States

A single ZIP code can have multiple sales tax rates; even neighboring houses in the same ZIP code can have different rates. In addition, sales tax jurisdictions often overlap, so the right rate will be a combination of rates from all applicable state and local jurisdictions. There are over 12,000 tax jurisdictions in the U.S. alone.

What this means is at the time of the consumers purchase, we may not know exactly what business is fulfilling the order. 

In general, this is mostly a great thing for consumers as taxes usually do not need to be collected as businesses are not always in the same state as consumers placing orders.

If this is the case, sales tax WILL NOT be charged on the order. 

In order to keep the consumers credit card information safe, we pre-authorize the tax amount we may need to collect if the fulfilling business is within the same state as the consumer. 

Because of this, the tax that is first collected for your order may not be the actual amount charged to the consumers card.

Let's take a look at how sales tax is calculated by Quivers in the United States:

Taxes can change at any time, but the information for current sales tax rates is frequently updated by various services. Quivers utilizes real-time tax calculations to ensure we are always calculating and collecting taxes for your business accurately. 

The first principle of US taxes to take into consideration is the location of the business. If both the consumer and the business fulfilling the order are in the same state, or that state has Nexus requirements, Quivers will collect tax. If the business is not in the same state as the consumer or has a Nexus requirement for that state, taxes are not collected.

In the United States, each state has different laws which determine whether or not your business qualifies for Economic Nexus, based on physical presence, gross sales volume, transaction count, or other factors. If you have Economic Nexus in a state, you will be required to collect and remit sales tax to that state. If you do not have Economic Nexus in a state, Quivers may not charge sales tax for that state (depending on the rules of that state).

You can find more details about sales tax by state according to the new Supreme Court Ruling, here.

How taxes are calculated:

There are two ways depending on the state that taxes are calculated. Each state for tax purposes is designated as an "Origin" or "Destination" state. 

Origin States - These states require tax be calculated based on where the fulfilling business is located.

• Arizona
• California*
  • California is unique. It’s a modified origin state where state, county and city taxes are based on the origin of where the product is being shipped, but district taxes are based on the destination (the buyer). However, in the case that an order is being fulfilled by a different zip code than where it is shipping, district taxes (county, city, etc.) are not charged, and instead, only the default 7.25% rate is used. In California, tax is also not collected for any shipping costs that may have been collected. 
• Illinois
• Mississippi
• Missouri
• New Mexico
• Ohio
• Pennsylvania 
• Tennessee
• Texas
• Utah
• Virginia

Destination States - These states require tax to be calculated based on where the consumer's shipping address is located. 

• Alabama
• Arkansas
• Colorado
• Connecticut
• District of Columbia
• Florida
• Georgia
• Hawaii
• Idaho
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Nebraska
• Nevada
• New Jersey
• New York
• North Carolina
• North Dakota
• Oklahoma
• Rhode Island
• South Carolina
• South Dakota
• Vermont
• Washington
• West Virginia
• Wisconsin
• Wyoming

The sales tax Quivers has collected for a particular order will display next to each item in the "Tax"column.