1.       What are sales taxes?

a.       Taxes imposed by the states for transactions that occur within their borders. The most common type of sales tax is the completion of a retail sale. Sales tax can be imposed by multiple levels of state government and may include state, city, county or other taxes to support the state.

2.       Who is the taxpayer for sales tax purposes?

a.       The consumer pays the tax and the seller serves as an agent who must collect the tax on the states behalf. Typically for a self-employed people, they would have to collect, document, and pay their tax; however at Southwestern our accounting staff pays each jurisdiction for you so you will only have to pay one lump sum.

3.       How the tax is generally computed?

a.       Sales tax is computed by jurisdiction which combines state, county, and city taxes. Sales tax varies by location (yes, the same physical area can have different tax rates). For example, Chicago (Cook County), IL has a sales tax rate of 9.25% which includes a 6.25% state tax, 1.25% city tax, and 1.75% county tax while Baton Rouge, LA has a sales tax rate of 9% which includes a 4% state and 5% locate tax.

4.       Where to go to determine sales tax?

a.       Each state government will have a list of jurisdictions and their sales tax rate (remember sales tax can vary within an area). http://www.sale-tax.com/ has a list of tax rates by city. http://www.salestaxinstitute.com/resources/rates is a good resources with a list of sales tax laws by state.

5.       Is tax calculated on shipping and handling?

a.       This depends on the jurisdiction that you are working in. Some areas it is taxed and other areas it is not taxed.

6.       When using the eOrder process, tax is calculated for you systematically. You should not never change the tax rate.

7.       When using a paper order form, ensure that the tax rate you are using is correct and that it calculates correctly.

a.       Validate the tax rate for the address

b.     Validate if shipping and handling is taxed

c.       Remember if you offer a discount off of retail price, you still must tax based on retail price