Tax

If you need to charge state sales tax, consumption tax, VAT, GST, or other tax, Volusion gives you an array of flexible options to automatically process tax charges for various regions and locales. This article will guide you through setting up tax and show you other tax-related functions of the Volusion system.

Contents

Using the Volusion Tax Page

To get started, log in to your Admin Area and go to Settings > Tax.

For US-Based Merchants

By default, all new US-based stores are configured to use automatic rates.

Default Tax Rate

The first time you visit the Tax page, you'll see a pop-up window asking you to verify the default tax rate, which is set to the state you entered for your business when purchasing your hosting plan. If you only charge a single tax and the rate looks correct, click Yes, Looks Good.

If you want to change the default tax rate for your store:

  1. Click No, I’ll add a new rate.
  2. From the State menu, select your state.
  3. Note that some states are origin states and some are destination states. If your store is based in an origin state, be sure to enter the required zip code.
  4. For destination states, you only need to make a selection from the State menu.
  5. Make sure the Enabled check box is selected.
  6. Click Set.

To create automatic tax rates for any additional states where you currently file taxes for your business, click Add at the top of the page and follow the same process outlined above.

Note About Origin and Destination States

Currently, online stores are only required to charge tax on same-state sales. The calculation of sales tax in your state will either be origin-based or destination-based. Origin states charge tax based on the location of your business, while destination states charge tax based on an order's destination, or shipping address.

Automatic Tax Rate Fields Explained

When using automatic rates, you'll see a table on the Tax page with several columns of values. The following table explains the purpose of each column.

Details
State This is the formal name of the state or province your rate applies to.
Zip Code
This field displays the zip code you entered to calculate tax rates in a particular origin state. This field will appear blank for destination states.
Tax Rate
This is the current tax rate (for origin states) or range of tax rates (for destination states).
Effective Date
This date indicates the most recent time tax rates were updated for a particular state.
Status This field indicates whether a tax rate for a particular state is enabled or disabled in your store. It can be changed by clicking the tax record and selecting or deselecting the check box for Enabled.

Using Manual Tax Rates

Note that you can also manually configure your store's tax rate, or charge tax for multiple regions, postal codes, or states/provinces. To enable manual tax rates:

  1. Go to Settings > Tax.
  2. Click the three-dot actions menu icon.
  3. Make sure Are you based in the United States? option is selected.
  4. Select Manually manage tax rates.
  5. Click Save.

You'll see one default tax setting already listed in the Tax table. Click Edit to change the details for this tax rate, or use the following instructions to add a new tax rate:

  1. Click Add.
  2. Make sure the Region Country menu is set to United States.
  3. In the Tax State Short field, enter the two-letter code for your state.
  4. In the Tax State Long field, enter the full name of your state.
  5. If the tax rate applies to a specific postal code (zip code), enter the code in the Region Postal Code field. If the rate applies to an entire US state, leave this field blank.
  6. In the Base Tax Title & Rate fields, enter the tax rate title (the name of the tax as it will be displayed to your customers) and the actual tax rate to be charged.

To create additional manual tax rates, click Add at the top of the page and follow the same process outlined above. There is no limit to the number of tax rules you can set up.

For International Merchants

  1. Click Settings.
  2. By default, tax will be set up for a store based in the United States. If your store is not based in the United States, be sure to select No for Are You Based in the United States?
  3. Once you select No, you’ll see two drop-down menus for configuring types of VAT and GST taxes, as well as tax on shipping. Choose your preferences, then click Save.
  4. Click Add at the top of the page.
  5. In the Region Country menu, select which country and state or province your business is based in.
  6. For Base Tax Title & Rate, set the tax rate title (the name of the tax as it will be displayed to your customers) and the actual tax rate to be charged.
  7. For users who have enabled VAT or GST taxes, additional tax rates settings will be configurable – Tax 2 and Tax 3. You can specifically configure these taxes to govern how VAT or other taxes will behave within your store.
  8. Click Save.

Your store will now begin charging tax based on the settings you've applied.

If you need to further configure your store's tax rate or charge tax for multiple regions, postal codes, or states/provinces, you can add and configure additional tax rates by clicking Add at the top of the page again.

Keep in mind that you'll need to create an individual rate for every region or location you need to collect tax for. There is no limit to the number of tax rules you can set up.

Manual Tax Rate Settings Explained

The following table explains the settings within the tax settings page:

Details
Tax ID This is an auto-generated value created by your store when you create a new tax rule to identify it by.
Tax Default Sets the tax rule to be the default value applied to a customer's cart if they if they have not yet defined shipping information. For use with certain Value Added Taxes.
Ship To Location
Tax State SHORT This field is reserved for the 2 character code used to identify which state or province the tax rule will apply to. For example, enter NY for New York or SK for Saskatchewan.
Tax State LONG This is the formal name of the state or province your rate applies to.
Tax Postal Code This is an optional field if you need to charge different tax rates depending on what postal code the order is shipping to. For example, if you wish to charge 8.25% sales tax for postal code 12345 but 7.15% sales tax for orders going to postal code 54321.
Tax Country Specify which country this tax rate should apply to.
Tax Rates
Is Vat Enable this option if you need the tax rate to be calculated as Value Added Tax. Be sure to enable it if you are required to charge VAT on your customers' orders.
Tax1 Title This field will define the actual name of the tax rule as it is presented to your customers in the shopping cart portion of your store.
Tax1 Percent This is where you define the actual rate the tax rule will charge to customers' orders. For example, entering 8.25 will charge 8.25% of the customer's order as tax.
Tax1Ignore No Tax Rules When enabled, Tax1 will override any settings for products or customers configured as non-taxable.
Tax2 Title This field is for the name for the second tax cost associated with the tax rule. This is essentially a tax applied to a tax. This setting is to fulfill certain countries' tax requirements depending on local taxation laws.
Tax2 Percent This field contains the actual percentage for a second tax rate associated with this tax rule. This setting is used to fulfill certain countries' local tax requirements.
Tax2 Ignore No Tax Rules When enabled, Tax2 will override any settings for products or customers configured as non-taxable.
Tax2 Include Previous This menu setting allows users to configure how the Tax2 rate will be applied to the order. The default option, Add to Total Only, or NULL will calculate Tax2 based on the order total. The second option, Apply to Total and Tax1 will calculate Tax2 for the order total with Tax1 added in.
Tax3 Title This field contains the name for a third, additional tax cost associated with the tax rule. This setting is used to fulfill certain countries' local tax requirements.
Tax3 Percent This is the actual percentage charged for the third tax cost associated with this tax rule.
Tax3 Ignore No Tax Rules When enabled, Tax3 will override any settings for products or customers configured as non-taxable.
Tax3 Include Previous This menu lets you configure how the Tax3 rate will be applied to the order. The default option, Add to total only or NULL will calculate Tax3 based on the order total. The remaining options will allow users to configure Tax3 to calculate for the order total either Tax1, Tax2, or both Tax1 and Tax2 already added in.

Tips and Settings

Customizing Automatic Tax Display on Your Storefront

Tax Level Display

By default, your customers will see tax displayed as a single, combined rate at checkout. You may want to display all available tax levels to your customers in an itemized fashion. To enable an itemized display of taxes at checkout, go to Settings > Config Variables and enable Display Tax Breakdown to Customer.

This will split out the tax rates on the Shopping Cart and One Page Checkout pages of your storefront.

This will also split out the tax rates in the order confirmation email that your store sends to the customer. Note that the individual tax rates will always display in the Details section of the Order Details page.

Tax Name Display

To change the text for the word “tax” on your storefront, go to Design > Site Content and select PageText from the Article Group menu. Scroll to PageText ID 734. Change the word “tax” here to update how it appears on your storefront. Note that this PageText controls the label for the combined tax as well as the label for the individual tax rates (if Display Tax Breakdown to Customer is enabled).

Tax on Shipping

In order to designate whether or not your store collects tax on shipping, go to Tax > Settings and click Settings at the top of the page. Choose your preference from the Tax on Shipping menu, then click Save.

Note that shipping charges are only taxed on purchases that are otherwise taxable.

Importing Tax Settings

If you need to configure a wide range of tax settings, you can save time by importing information directly into your store's tax table with the Inventory > Import/Export feature. Select Export Wizard link within the Import/Export section to export the existing tax table to a CSV file - which can be edited in a spreadsheet program such as Microsoft Excel.

Once the tax table is exported to a CSV file, it can be edited by inserting or copy and pasting tax settings into the table columns. When finished, use the Import Wizard in your Admin Area to import the updated tax table into your store.

See Import / Export for more information.

Value Added Tax and Goods & Services Tax Settings

If your region requires VAT or GST, you may need to set how those taxes are displayed to your customers in relation to product prices.

  1. On the Tax page, click Settings.
  2. If I Am Based in the United States is set to No, you'll see menus for choosing how VAT & GST are applied to order costs and how they're displayed to your customers. The default setting is Disable VAT.
  3. Choose your preference within the VAT & GST menu, then click Save.

If you want to change the exact wording of how VAT or GST is displayed in product prices and on orders (for example, if you want it to read "Including GST" instead of "Inc GST"), see How to Change GST or VAT Display

Setting Up Tax-Exempt Customers

Some of your customers may have a tax-exempt status (for example, charities or non-profit organizations). Here's how to make a specific customer registered with your store tax exempt:

  1. Go to Customers > Accounts.
  2. Click on the ID number of the customer you want to edit.
  3. In the customer settings, under the header Special Privileges (click the header to view its settings), choose Tax Exempt/Does Not Pay Tax from the menu labeled PaysStateTax.

Finished! The customer you edited is now tax exempt and will not be charged any tax by your store.

Setting Up Tax-Exempt Products

To set a particular product as tax exempt:

  1. Go to Inventory > Products.
  2. Click on the product code of the product you want to edit.
  3. Under Advanced Info > Pricing, set the Taxable Product menu to N.
  4. Click Save.

Additional Tips

Tax rules are applied to orders as designated by your store's tax table. If no match can be found, tax will not be applied for the order. You can view the tax table in its entirety by clicking View List at the top of the Tax page.

The postal code setting within a tax rule overrides the state or province code settings. For example, a tax rule applying to California configured for postal code 91210 will only apply to orders shipping to the 91210 postal code - not the entire state of California.

Note that by default, your store comes with a tax rate pre-programmed for the US state of Texas as an example of a properly configured tax rule. If your operation is not based in Texas, we recommend deleting or modifying this tax rule to meet tax requirements for your location.

Summary

No matter where your business is located, your store makes it easy to configure tax settings precisely and accurately.

Watch the Tax video series