Online sales tax being charged on non-taxable items

[KingstonBread]

Hey there. I run a bakery and most of my items (like bread) are not taxable in New York State. We sell in-store and online. There used to be separate tax controls for the items in Square online, but since Square Online items merged with Square Dashboard items, that no longer seems to be the case. I created a new bread yesterday, set it to non-taxable in Square dashboard, and taxes are not being charged in-store.  However, when people purchase the item online, they are being charged sales tax per my website default, I guess. 

Breads and other items that existed before the merge/migration a few months ago have a seperate toggle in their dashboard entry that says ECOM Non-Taxable, and it's toggled on.  I do not see that option for the new items I have just created.  

We've already had a customer request a refund for the sales tax she paid on bread yesterday. I would like to correct this as soon as possible, obviously!  Am I missing something? Does anyone know where the online item-level tax controls live now?  This article seems to be outdated because I don't have anything like "item-level tax rates" this in my account settings ... I'm simply taken to the Square dashboard tax page.  Please help! 

[TheRealChipA]

Hey there, @KingstonBread.  I’m going to assume here that your sales tax calculations are ALWAYS the same whether orders are placed in person or online.  If that is not the case sometimes, let me know.  Otherwise….

From your online dashboard main menu, go to Online > Shared Settings > Sales Taxes.  There, you will see Item Level Tax Rates.  In my case, I have pickup and QR code orders toggled on, and delivery orders toggled off since I don’t offer delivery.

Set your as need be and from now on your POS sales tax rules become the master for your online sales, as well.

Let me know if you need anything else.

[KingstonBread]

Thanks so much! Yes, that helped; it was hiding in "Shipping and Delivery" even though I really needed to change the pickup settings.  Appreciate your help! 

[RobynR · Accepted solution]

Hey @KingstonBread, 

I understand how frustrating it must be to have sales tax applied incorrectly to your non-taxable bakery items, especially with customers already requesting refunds.

A key setting to review is whether shipping and delivery taxes are enabled for your online orders. Square uses tax registrations to automatically apply the correct tax rates, including for shipping and delivery, which could potentially affect your non-taxable items if not configured properly.

To verify and adjust this:

1. Check Your Settings:

   • Sign in to your Square Dashboard.
   • Go to Account & Settings > Business Information > Sales Taxes.
   • Under Shipping and Delivery Taxes, select Manage Settings and ensure the settings align with your tax requirements.

2. Review Relevant Articles:

   • The article mentioned in your post provides more information about Charging Tax on Shipping and Local Delivery Fees.

Let me know if reviewing these settings resolves the issue or if there’s anything else I can assist with!

[KingstonBread]

Thanks so much! I didn't see it at first because it's called "Shipping and Delivery" and I was really looking for pickup settings. But yes that seems to have fixed it.  Appreciate it!