I don't know if this has been address or not, I can't find it through the search.


If you set up global free shipping say for $75.00

Choose a product/products greater than $75.00 and add them to cart

Checkout and enter address and zip for what ever state your collecting taxes in

In my case it is Texas 76.00

Tax 6.45 7.75%

Shipping 7.20

Total 82.45







This looks correct at first glance but if you do the math tax is being charged on the shipping even though shipping is free and removed.



We are running Bvc5 SP2



Richard

www.somethingmorestore.com

Mitch,

I can't agree with your logic there. This is much more likely a bug.

My reasoning is this, your "free" shipping is just as you put it, a "cost" of doing business, it is not part of the retail transaction price and therefore should not be subject to a sales tax. Do you feel that sales tax should be accessed on your full cost of shipping if you setup a "By Weight" shipping method and decide to charge $1.99 for the shipping when the shipping cost is actually $10 for you?

Also, if you offer a product at a buy one get free special, do you access sales tax on the free item based on it what its retail price SHOULD be or do you access it on what you'd normally charge for the item? Just like discounting a product price, the amount that the sales tax is accessed on is what is on the invoice, not your cost or you should be paying sales tax based on your cost for everything including the products your selling and saving yourself a bunch of money.

From: http://cpastar2.cpa.state.tx.us

---

Thank you for your recent letter In which you asked for a ruling response to
the following sales tax questions:

1. Shipping and Handling:

Question A. Is shipping and handling subject to sales tax If they are listed
together as a single line item on a customer invoice?

Response: If the item being shipped is taxable, the shipping and handling
charge is also taxable.

Question B. Is shipping or handling subject to sales tax if they are listed as
two separate items on a customer invoice?

Response: If the item being shipped is taxable, both shipping and handling
charges are also taxable even if the two charges are separately stated.

---

I called the Texas Tax Authority and was told that because shipping is a non-tangible property, it isn't taxed the same as tangible property. This means that the value of the shipping isn't taxed until/unless it is charged to the purchaser.

Shipping charges are subject to sales tax, free shipping isn't a sales taxable item because the shipping wasn't 'sold' to the consumer.

You are correct, free shipping isn't sales taxable, in Texas at least.