Wednesday, July 22, 2015

The danger of using ZIP Codes alone for trying to determine sales tax

Retailers should be sure to register with the Tax Department and obtain a Certificate of Authority. "Your application (for a Certificate of Authority) will be processed, and, if approved, we'll mail your Certificate of Authority to you. You cannot legally make any taxable sales until you have received your Certificate of Authority."

Based on the literature, I would HIGHLY recommend AGAINST using ZIP Codes alone for trying to determine sales tax, since ZIP Codes cross county boundaries. One needs to charge at the rate of the jurisdiction served.

Is the item taxable? Probably.

There are some free sales tax calculator online, e.g. and Pitney Bowes for the US; NYS Tax Department and Earth Odyssey for New York only; there are undoubtedly others. And of course, there are paid sites, such as Strike Iron and the Sales Tax Clearinghouse.

One can also Google sales tax calculator software and find a ton of these for sale. These, though, will not make the determination of what items may not be taxable.

For international shipping: if you just mail it, you need to pay the rate for that country, or part thereof. BUT if you ship it via UPS or FedEx, or similar services, if the sender asks for a bill of lading, and no sales tax needs to be charged.

1 comment:

CGHill said...

This applies as well outside New York. In Oklahoma City, ZIP 73159 crosses a county line; Oklahoma County does not yet have a sales tax, but Cleveland County does. Nor is this the only ZIP in town so affected.