There are two main factors for how sales tax is charged on your order. One of these factors would be whether we have a retail store or warehouse in your state. (Currently we only have one in Washington state). Another would be if we qualify for an Economic Nexus. We have this in most states as new laws were past in 2018-2019 with different thresholds for each state. Usually these are based on number of sales or dollar amount of sales done in the state.
From there we have states broken into categories.
No Taxes: These states have no sales tax laws. Alaska, Delaware, Montana, New Hampshire and Oregon
State Based Taxes: Your state has set the taxes to be paid on anything shipped to that state.
Destination Based State: Your state has laws that charge taxes based on the state sales tax rate, in addition to the county and city. Thus you'll see at least 3 tax rates on your order checkout page. For more information on the ever changing laws on state taxation, we have found this website to be most helpful. https://blog.taxjar.com/economic-nexus-laws/
Confused yet? We sure were, so we hired an extra accountant to manage online taxes and use software integration to streamline this as efficiently as possible. As you can imagine, in the destination based states when one city changes its tax rate, we need to know about it to report taxes correctly, this becomes near impossible without software integration.
*In some states the tax code is extra challenging. We've been advised to charge "the highest local tax" state wide so that we don't under report while the law figures out a practical way to do online taxes. So what does this mean for you? A small minority of our customers will have a tax rate slightly above their current local tax rate. This equates to a few extra cents being paid in taxes. We report and pay this to the state. This prevents us from under collecting and causing long term problems. We appreciate your understanding and rest assured we hope the law gets streamlined soon, so we don't have to have an accountant tied up all the time with these taxes and don't need to collect those extra pennies from you.