The Night Blogger wrote:
Blog? Whose blog? You've posted to the newsgroup comp.programming.
It's not a blog at all but a Usenet newsgroup.
There are 50 states, but it is more complicated than just a single
rate for each state. In Texas, where I live, the state sets a
rate (which is 6.25%) and then gives the localities (such as counties,
cities, and transit agencies) the authority to add to it. The
state sets a maximum additional amount that the locality can add
to the 6.25%, so that the total sales tax can range between 6.25%
and 8.25% depending on local rules. Since there are 254 counties
and even more cities than that, and since the combination of county
laws and city laws may interact differently depending on what part
of the county you're in (it would be possible to be inside a county
but outside the city limits), in theory there could be thousands
of different tax rates depending on your location. There are, at
least, thousands of different combinations of authorities that
can set (part of) the tax rate.
Of course there are other variations as well based on geography.
Non-profit organizations (such as charities and churches) are
exempt from sales tax, and I believe resellers are exempt from
it too since it is intended to be a tax on retail sales. I
have made purchases in the past where the vendor required a
copy of my company's reseller certificate (issued by the state?)
and would then not charge us sales tax, since we were going to
resell the purchased items to a customer of ours.
Also, it may depend on the item. When consumers buy unprepared
food (food that is not ready to eat, such as uncooked meat), the
food is not taxed (at least in Texas). But other types of food
are taxed. Some other products, such as cars, are taxed at
different rates.
Because of all these complications, most software would simply
allow the user to determine the appropriate tax rate, enter that,
and use it in the calculation. Since some line items would be
taxable and others would not (and since some items might be
taxable at different rates from each other), the usual approach
would be to set up a short table of tax rates, then allow the
user to associate a given rate with a particular line item or
class of line items.
I'm not a lawyer or accountant, so I can't answer this question
authoritatively, but from what I understand, the Constitution would
not allow either the State of California or the State of Massachusetts
to charge sales tax in this case. The reason is that this would be
interstate trade, which the states do not have the power to regulate.
However, if the company is based in California but makes a sale to a
customer in Massachusetts and has an office *in* Massachusetts (no
matter what its function is), then the transaction might be subject
to sales tax.
Generally speaking, the actual calculation of the tax is done one
the entire total, taking into account which line items are taxable
(and at what rate) and which aren't. I *believe* this is in order
to avoid round-off error. Otherwise, there would be too much
temptation to price things so that the round-off error reduces the
taxes. Or, maybe it's just traditional and uses less space on
paper. :-)
Often, labor is not taxable at all. But, sometimes it is. In most
cases, I think programming labor is not subject to sales tax at all,
but again I'm not a lawyer or tax accountant.
Once you know the rates, it's not too complicated to calculate it,
but knowing the rates is not easy. Luckily, it's probably not
necessary either. For one thing, nobody expects your software to
know the rates for invoicing labor (at least I think they don't),
and further, it would in many cases be easier for the person to
enter the tax rate than it would be for them to answer all the
questions your software would need answered in order to properly
compute it.
- Logan
On Mar 4, 12:59 am, Logan Shaw <lshaw-use...@austin.rr.com> wrote:
No, the rule is that Massachusetts cannot compel a vendor in
California to collect sales tax for sales to a Massachusetts
purchaser. CA and MA could sign a tax treaty so that they would
collect for each other (and then CA would compel the CA vendor to
collect sales tax for MA sales - for example NY and CT have such an
agreement). In that case the seller collects the tax, pays it to
*their* state (along with an appropriate tax return), and their state
will then pass it on to the buyers state.
A larger effort along the same lines is the Streamlined Sales and Use
Tax Project, which aims to provide a simplified set of definitions for
what gets taxes and at what rates, while also doing the cross-state
collection thing.
To the best of my knowledge there is no current agreement of that sort
between CA and MA.
*But* the purchaser's state *can* still collect tax on the sale, and
AFAIK, *all* states with sales taxes also have a basically identical
"use tax", which must be paid directly to the state by the purchaser,
instead of being collected indirectly by the seller. So the person
from MA, whose purchase is not charged sales tax by the CA company,
*will* in that case owe MA the equivalent amount of money directly (as
use tax). If you don't, like most individuals, bother to pay your use
tax on out of state purchases, you're merely a tax cheat, although the
probability of you being caught does not seem all that high. (IANAL)
Basically if the seller does business (has an office, warehouse,
distribution or retail facility) in the same state as the buyer, they
will be obligated to collect sales tax in that state, and submit
appropriate tax returns to the buyer's state (along with the tax, of
course).
