How ePages helps you control your tax settings in the USA

by Kristof Maletzke, 29.01.16



If you want to sell products within the US, you need to take care of some tax settings in your shop. Read our article to learn everything about this topic.

For most people, taxes are a quite off-putting topic. Online merchants are no exception: Especially in the US it can be tedious to make sure that all your tax settings are correct.

Luckily, the ePages shop software automatically takes care of the basic tax settings if you are selling within the US. The settings are based on your shop’s location. For the customers of your shop, the sales tax is then calculated during the checkout process.

avatax You can also use the paid service AvaTax, which handles all the tax settings for you and also helps you filing your tax reports. If you want to learn more, you can join webinars by Avatax on 16th February or on 29th March.

What do I need to know about taxes within the USA?

In the USA, sales tax is not collected federally, but via states and other local authorities. US states, counties, cities and even some special communities can have their own tax rates, which are summed up to a combined tax rate. Some states do not have a sales tax at all. All these special cases make tax calculation more complex than in most other countries, which often have just one set of sales taxes nationwide.

What are destination based and origin based taxes?

Some US states have a destination based tax model and others have an origin based one. For destination based states, the destination of the order is relevant for tax calculation. In origin based states, the taxes depend on the location where the shop resides.

What is a Nexus or physical presence?

As an online merchant who is selling within the USA, you only have to collect sales tax in states where you have a so-called Nexus.

You have a Nexus in a certain state, if you have some kind of physical presence there:

  • You automatically have a Nexus in the state where your business resides.
  • Additionally, if you have for instance storing facilities or offices in other states, then you have a Nexus in each of these states.
US tax matrix nexus

You have storing facilities in other US states? Then you have a Nexus there

An example: Your business resides in Florida, you have a second office in California and a storehouse in Texas. That means that you have a Nexus in the states Florida, California and Texas. Therefore, if you ship an order to a person or company in one of these three states, you have to collect sales tax there.

The percentage of sales tax you have to collect in your Nexus states depends on the state.

For more information on this topic and to find out what qualifies a Nexus for a certain state, please contact the Department of Revenue of this state.

How do I view and edit the tax settings for my ePages shop?

When you enter your shop’s address during the setup and the address is located in the USA, the correct tax matrix is automatically created for your shop – based on the state where your business resides. The tax matrix will also updated if you change your shop’s location under Settings >> General Settings >> Address.

Tax calculation in your ePages shop

You can manage your tax settings in your shop’s administration area

To view and edit the tax settings in the administration area, select Settings in the main menu and then Tax calculation. On this page, you can see the tax matrix. It includes a row for the state your shop resides in and a row for the rest of the world. In the column Combined tax rate you can see the combined rate for the state, county and city of your shop. If your shop is residing in a state with destination based tax rates (see explanation above), the combined tax rate is not a simple percentage, but a range of taxes: the lowest to highest possible tax rates.

If necessary, you can edit the combined tax rate directly in the table and save the changes. In order to restore the default value, select the back-arrow button on the right side of a tax rate field and save the changes.

Read our detailed help article on US taxes to find out which other settings you should take care of. 

Note

While this article contains basic advice, it makes no claim to completeness or accuracy. It may not under any circumstances replace legal advice in individual cases.

About the author


is Communications Manager at ePages.

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