Square Online: Collect Sales Tax for Out of State Orders

[taylorandjones]

Hello, I'm a Square Online seller and website designer that helps Square Online sellers.

I'm looking for guidance on behalf of a client that is permitted to ship alcohol to a specific set of US states. They are required to collect Alcohol Tax for Square Online orders that are shipped to the set of states outside their Square account tax registration state/business presence.

According to Square's help document:

https://squareup.com/help/us/en/article/6878-all-about-taxes-square-online-store

"The most important thing to remember about US taxes is that you only need to collect them if you have a business presence in the state that you’re shipping or fulfilling an order to. If you don’t, you don’t collect taxes."

An example shipping scenario is noted in the document (screenshot is attached for reference.)

Is their a sales tax or item setting that would auto-calculate sales tax properly during Square Online checkout for the out of state orders?

Is it permissible to add tax registrations for states even though no physical business is present?

I truly appreciate any helpful advice.

[HC_Charlie]

@taylorandjonesthanks for your question. It is normally not required to collect sales tax unless a business has a physical location within that state, so that is correct. I would follow that rule, except you mention specifically that the business you're working with is required to collect tax on alcohol sales in certain states. I'd go back and ask specifically...there must be some guidance from somewhere that business was told about collecting taxes.

So if they have a list of those states (and the tax rate) you can create a tax rate in Square under tax settings. Once those tax rates are set, any online orders coming in with shipping addresses to those states should auto apply that tax rate.

https://squareup.com/dashboard/business/manual-taxes

[taylorandjones]

Thank you @HC_Charlie I truly appreciate your time and effort.

The direction about creating additional states tax registrations on my client's sales tax dashboard is helpful.

We're bumping up against another sales tax sticking point with regard to a manually added sales tax rate assigned to specific items. Here's the community board string for this issue:

https://www.sellercommunity.com/t5/Square-Online/Square-Online-Item-Level-Sales-Tax-for-Shipping-Ord...

Any incremental advice is welcomed!

Many thanks!