Don’t include shipping in sales tax

I have a long running ticket with support about being taxed on shipping. It doesn’t work correctly.

I agree that it doesn’t work correctly. I submitted a support request through WooCommerce.com and they simply said it is currently not possible to keep shipping from being taxed with their automated tax feature. Either it would have to be setup manually or it looks like it could be done with a third party premium sales tax solution such as Avalara. I guess there are not enough people asking for this for the developers to go ahead and add this capability.

Hey @winmkt & @klishb!

We appreciate you taking the time to report this and share your feedback regarding how Automated Taxes work and what behavior you’d prefer to see from it.

Because of how complicated taxes are (and how much the laws vary by location), the goal when we initially launched Automated Taxes was help provide an easy, free solution that would allow new stores to not have to worry about figuring out tax rates (and how they apply to the store’s unique situation) and instead focus on figuring out how to start getting sales. Most of the feedback we’ve received is that it is immensely helpful, but as both of you have pointed out, it’s not a complete solution for many businesses. Instead, as Eric mentioned above, using full versions of tax-specific integrations (like the Avalara example) is necessary for any sites that need tailored solutions (like those related to tax classes or shipping taxes).

WooCommerce Services is certainly a plugin that we’re excited about enhancing with future updates, though currently it doesn’t look like an expansion of the Automated Taxes functionality is really on the roadmap, so we can focus on the areas that we can have a bigger impact on (like streamlining shipping/fulfillment), while leaving the complicated tax situations to the tax experts (like Avalara, TaxJar, etc).

I hope this helps clarify why it doesn’t work as expected, but if you have any other questions, let me know! Thanks!

Hi Shaun,

I guess my concern is that I’m not trying to do anything special here in my opinion. No advanced features, reporting, or automatic filing of taxes, etc. Certainly those kind of things should require a more full featured plugin. Whether or not shipping should be taxed is in the API response you’re already getting back from TaxJar. Leveraging that response seems like it would be quite straight forward to code and not a time-consuming task. We’re also not talking about adding additional features. This is about fixing something already in the product that doesn’t work.

• This reply was modified 4 years, 6 months ago by klishb.

Hi Shaun,

Thanks for your response and explanation. I’m not sure how many people out there would like to be able to exclude shipping charges from the tax calculation but I hope you will at least add it to a feature request list.

I didn’t realize WooCommerce Services Automated Tax Calculations was powered by TaxJar (after reading klishb’s message I searched and read about it here: https://blog.taxjar.com/woocommerce-services-automated-tax-calculations-powered-taxjar/).

While I know nothing about the API, it seems to me that this could possibly be as simple as a checkbox to indicate exclusion of the shipping charge and if it is set to true, simply deduct the shipping charge from the order amount sent via the API to TaxJar. I know that is probably oversimplified but still it just doesn’t seem that complex to add this.

Eric

Shaun,

Wanted to add one more thing. I’ve studied the API request and responses. It actually works correctly the first time. It’s the tax table caching that’s breaking it. Once it populates the tax tables then it doesn’t work correctly. Is there any way to disable the tax table caching?

Hi Eric @winmkt,

As a side note, if you know what items are taxable I think you can use standard tax class on everything that you want taxable. I would rather have it dynamically determine that in case any laws change. For some reason you won’t find this in the WooCommerce Services documentation anywhere, but in order for this to correctly identify whether a product should be taxed you need to set it to taxable and set the tax class code per the TaxJar API documentation. That’s what I’ve done and if you look at the API request and and response you’ll see those tax codes do get used in the API call if you define them on products.

I really think WooCommerce Services should have that referenced in their documentation.

Hi klishb,

In my case, all products are taxable to residents in my state but Florida tax law says if I offer an option to pick up the product AND I show the shipping charge as a separate line item, I do not have to charge sales tax on the shipping charge. Generally for this project, I expect customers to be local so I could offer local pickup if I’d like and in that case, I’d be overcharging my customers if I added sales tax on shipping.

Anyway, I’m glad you chimed in here and added your more in-depth knowledge on the topic. Hopefully they will fix this but I doubt it is going to happen any time soon.

Eric

Hi Shaun @shaunkuschel,

I’m going to put a full summary of the problem in my eyes:

In our case we have food items (product tax code 40030) and candy items (product tax code 40010). In New York state, the shipping is not taxable if the entire cart is not taxable. So if I have all food items in the cart then the shipping should not be taxed. As soon as I put candy in the cart then the candy should be taxed and shipping should be taxed.

That all works in the WooCommerce Services implementation on the first transaction you do for any particular zip code. The plugin then writes to the tax class tables for caching purposes. That’s when it breaks. Subsequent sales will forever return the wrong result for tax on shipping because it’s no longer using the API for that zip code. Really the caching will never be reliable because whether or not shipping should be taxed needs to be determined at the time of sale since it’s based off what’s in the cart.

Hey @klishb,

Thanks for that info and summary- it definitely helps! I’ll pass it along and report back here soon.

Closing out this thread here, since the Github issue will be used for any updates:

https://github.com/Automattic/woocommerce-services/issues/2020