Taxes: No way to exclude taxes from shipping for specific areas

[mikeyarce]

In WooCommerce Tax rates, there's a checkbox that let's you indicate whether you can apply taxes to shipping as well as the product:

If you are using WooCommerce Services, this data is dynamically populated, so if you uncheck the "Shipping" box, the next time you go to the cart or checkout, it will be added back.

It would be nice to find a way for users to be able to exclude shipping from taxes for specific areas. Here is one example of when it would be useful, this one is from a customer in Florida:

It is my understanding that sales tax does not apply to shipping if it is itemized and if the customer is offered an alternative method of getting the product that does not require shipping expense. We offer local pick up in Florida. Therefore, we don’t believe the shipping portion of the cart total should be charged sales tax.

[jeffstieler]

It is my understanding that sales tax does not apply to shipping if it is itemized and if the customer is offered an alternative method of getting the product that does not require shipping expense. We offer local pick up in Florida. Therefore, we don’t believe the shipping portion of the cart total should be charged sales tax.

@mikeyarce do you know if they're charging for the local pickup option? Why is there a value to tax?

[mikeyarce]

@jeffstieler I think the issue is that in their state, if there is a cheaper shipping option available to the user (even if it's free with no taxes), they should not tax shipping at all.

[Luminus]

Hey @jeffstieler, just checking if we have any movement on this.

[jeffstieler]

@Luminus - I'm in contact with the folks at TaxJar about this issue. They're aware of it but:

Unfortunately we don't have a way to override shipping taxability yet, but it's something we're going to tackle in the near future.

I've pinged them again to see if there's any short-term solution.

[Luminus]

@jeffstieler, thanks for the heads up.

[conschneider]

Just a little ping. 🔔 . Any updates maybe?

[fastdivision]

Manually excluding taxes from shipping directly in the WC rate tables would be cumbersome for destination-based states with many zip-based rates such as CA, FL, or NY. We create those rates upon request based on the customer's address, so you'd have to uncheck "Shipping" for each zip code when they arrive in the system if we found a way to support this enhancement as-is.

To handle this directly in WCS, you might be able to check for a 0% wildcard tax rate for the given state / region. If a wildcard rate exists, use the "Shipping" value for that rate instead of TaxJar's default shipping taxability:

For this to work you'd also have to check the tax name / label (such as "Override") to prevent the TaxJar integration from overwriting the wildcard rate.

Alternatively, WCS would have to provide some type of UI to manage the taxability of specific states / regions to ensure the rates created fully exempt shipping. We do have an open pull request in the TaxJar repo to address FL shipping tax w/ local pickup for WCS. For TaxJar's plugin, I think we'd prefer to handle this directly in our reporting app for individual TaxJar accounts.

[joelwills]

@jeffstieler With the reply above is there anything we can do about this? Thanks!

[jeffstieler]

@joelwills the specific FL case will be brought into WCS when https://github.com/taxjar/taxjar-woocommerce-plugin/pull/46 is merged.

[iamgabrielma]

I took 786291-zen out from on-hold as this enhancement does not seem to have a priority at the moment. Commenting here to be sure that we followup with the user once this is live.

[GeoJunkie]

This came up in 3348870-zen. Because of the particular way that Florida taxes work, they were attempting to set shipping taxes for areas where it should be charged. The automatic removal of the Shipping flag was confusing.

[apmwebdev]

Another instance of this in 3710147-zen.

To clarify, this issue is not isolated to states that charge taxes for the items themselves but not for shipping.

It is a problem in any state, because if a product is marked as not taxable, the shipping for that product will still be taxed regardless. EDIT: So WCS will ignore the product-level tax settings for shipping as well as the postal code tax settings. Rather than change the setting, though, as it does with postal codes, the product-specific tax setting is simply ignored and shipping is always taxed.

Individual shipping methods can be marked as non-taxable, which seems to work.

Just to make sure we have all the information in one place, this issue has been reported a couple more times:

https://github.com/Automattic/woocommerce-services/issues/1475 https://github.com/Automattic/woocommerce-services/issues/2020

[SiR-DanieL]

One more report in 21378921-hc

[billrobbins]

Has this changed? I had a merchant in chat today who is facing the opposite problem. They need shipping in Florida to be taxed but the rates are coming without taxing shipping. I could replicate this on my test site. Here's a screenshot of the rate table with an origin and destination in Miami.

3127617-hc

[apmwebdev]

Another report in 4763290-zd-woothemes.

[AashikP]

Another report in 4901854-zen.

This is specific to what @apmwebdev clarified here: https://github.com/Automattic/woocommerce-services/issues/1226#issuecomment-773593439

[JSdesigNerd]

notes on #4901854 - Store physical location is in Pennsylvania where both food products are not taxable and shipping on non-taxable products is also not taxable. Currently (at least since a recent set of updates). The issue is that while the products remain untaxed, woocommerce is adding tax applied to the shipping but it appears only for deliveries IN Pennsylvania. Not sure if this is specific only to PA or because it's same state but it is an issue.

Posted the details also to remain connected to this thread. -thank you.