Sales Tax Q&A: How can we improve sales tax settings?

[Tom]

On November 10th, 2021 we hosted a Q&A with our Commerce Platform team which focused on sales tax settings.

The Commerce Platform team manages the sales tax product experience: everything from configuring tax settings in the online Square Dashboard to applying taxes to a sale, reporting, and filing.

One of the main goals of this event from our side was to ensure you're getting the most out of your tax settings and identify where Square can improve. We can't share out specific details on our product roadmaps, though we will certainly make sure all of the replies that came through on this post are considered as we iterate. Thank you to everyone who participated!

[lihui]

Hi @skiibum,

Thank you for sharing your feedback. Customer based tax exemptions are on our roadmap and could be the feature you are looking for.

[JK_Fiber_Art]

I guess we have to thank our elected state leaders and elected federal government officials (yep the politicians ) for causing all the tax confusion - it's clear that many of the decision makers are not small business owners and sell online, else the various current laws and policies for each individual state would not exist.  What we need now is a national standard method of properly charging taxes and perhaps a national database that can automatically calculate the rates and an automated system to ensure that the due tax is funneled to it's rightful recipient - good luck with that happening.  There are some 3rd party services that for a fee can do some of this for you but, for the small mom and pop shops, it's a huge cost and you're going to need a programmer to connect the interfaces.  We've tried setting up tables based on Zip Codes however, this was a challenge just for one state let alone the rest of the country.  Then there was the challenge of how to report the tax to individual location it was due - another issue to consider.  Everyone wants their tax share but, no one seems to have the solution that works for the little guy.  For us small businesses, all we're looking for is a behind the scenes solution - we don't need to how a system works other than it just works.  Just my thoughts of course !!

[lihui]

Hi @JK_Fiber_Art,

Different tax rates by Zip codes would definitely be a big overhead. Square Online does have an auto tax system that will help you with setting up the right tax rate. But these taxes do not sync to Square Platform. We are working on this now. Do you face this issue for your shipping orders mostly? Please do share your use case.

[SparkleandSpill]

A way to set a price that we want an item to be AFTER sales tax is applied would be nice. We keep our items at the same price online as we do at shows, and we include the tax in our prices at shows to avoid having to give change other quarters. 

[SKancianic]

We dealt with this same issue.  Under Account & Settings >business > Sales Tax, we set up 2 taxes, one for "Virginia Sales Tax", the Other, "Sales Tax - Included in Price". in the latter, make sure you turn on "Include Tax in Item Price"

Next, select the specific Items you want this tax rule to apply to.  This took me a while to figure out, but it works well.

We're a photography company, and oftentimes people are ordering school photos or ymca / little league sports photos, and we want to round out the final amount due on the form or sign.  We still pay the tax, but it makes transactions easier.

[sqnick]

I agree with @SKancianic you should be able to accomplish this by clicking the toggle to ‘Include tax in item price’

[divyar]

@SparkleandSpil,

Have you tried using the tax inclusive feature ‘include tax in item price’? If toggled on, tax is included in the item price. Do help us understand if there are any feature gaps that could be blocking you from using this.

[calebsavage]

A couple of critical issues with Square taxes:

- The way Square rounds money doesn't line up with the way that tax authorities or accounting software do. This has been discussed at length on these forums. Square uses the "round half even" method, which for a typical seller will under-collect sales tax when dealing with fractions of cents

-The Square Terminal API doesn't allow transactions to have sales tax as a separate line item. This is important for sellers with third-party integrations. 

[SKancianic]

Similar issue in our area of Virginia.   Sales Tax is 5.3% not a friendly number. 

[sqnick]

Hi @calebsavage, thanks for the feedback. We are investigating ways to provide more flexibility in the platform to allow our products to work with third party systems that may have different rules for rounding than the Banker’s rounding approach used across Square today.

I’m digging into the Terminal API case a bit more and I agree with you that this is less than ideal. In an ideal world it sounds like you would want to be able to pass the tax amount separately in the call to checkout. Is the main reason for this so the tax is broken out separately in your reports?

[divyar]

@calebsavage, 

Thank you for your feedback. Square currently follows Banker’s rounding. We have received similar requests and have that on our roadmap. For the terminal API, you make a great point. I see how your reporting could get affected due to this gap. Curious - once you see this come up as a separate line item and displayed in reporting, what would be your preferred experience for filing these taxes?

[florencews]

This is timely, I was just going to the forum to post a sales tax question. We have just one location but will be participating in a multi-day holiday show in a different county. We need to set up a location for the show, and the sales tax will be different than in our home county (both are in Georgia). I see we can do this with separate inventories, but we will simply be drawing from the inventory of our main store and charging sales tax for the other county. Is there an easy way?

[divyar]

@florencews, 

Only way I can think of is you could create 2 taxes, one for your POS location and one for the booth and use the disable tax feature to turn off the tax that you do not want to apply. You can disable a Tax from Actions > Disable Tax on the top right corner of Edit Tax modal. To re-enable, you will have to come back to the same Actions menu to enable Tax. When a Tax is disabled, it will not apply to any of your transactions. Hope this is helpful.

[florencews]

Thanks, I will try that!

[baretattoo]

I run a tattoo shop in NJ and my services require sales tax. I have recently been informed that sales tax is also required on deposits as well. currently, sales tax is not able to be added to deposits, will this change?

[Tabbatha1031]

We just figure the tax and put it in invoice but that doesn't go into the final tax figures.  So yes it needs to be easier

[sheepy_weepy]

I second this. Deposits are supposed to be sales taxed so if someone bails on you and you keep the deposit, the sales tax has to be calculated after the fact and taken out of your pocket. Really annoying.

[divyar]

@baretattoo, 

Thank you for your feedback. Looks like you collect the payment as a deposit and final payment and want the sales tax to apply accordingly on each of the transactions. This is a product gap now. We have this on our roadmap. Curious - which Square product you are using.

[baretattoo]

I use the payment processor app and the card reader

[BDaulton]

My state does not charge sales tax on food items so it would be great if my retail store can exempt all items from the "food" category.

[AcuWPB]

Yes, seconding this. My services (health care/wellness) and products (vitamins) are sales tax exempt but Square keeps reminding me to complete my account by setting up sales taxes. I have always shied away from offering additional products because then I'd have the effort of collecting sales tax only on certain items, but if there was a way to categorize products and collect sales tax only on certain things, I could potentially expand what I sell.