The Department of Revenue recognizes that sellers using online shopping carts face unique challenges to change to destination-based sales tax. Some shopping carts have limited capabilities in calculating sales tax. For example, some will only accept one tax rate per state; others apply tax rates only using a 5-digit ZIP code. As you may know, Washington has about 16 different sales tax rates within multiple taxing jurisdictions (about 355) and 5-digit ZIP codes do not accurately correspond with tax rates or taxing jurisdictions.
It is ideal if the shopping cart can use the actual delivery address or the corresponding ZIP+4 code, either of which will deliver an accurate tax rate and taxing jurisdiction. However, that is not available to many sellers at this time.
With this issue in mind, the Department of Revenue has developed a number of tax rate tools to help businesses with this change. Depending upon the capabilities of your shopping cart, you may be able to integrate one of our downloadable databases that provide tax rates by address, or ZIP+4. These databases are in Excel format and are available for download from our web site at http://dor.wa.gov/content/FindTaxesAndRates/SalesAndUseTaxRates/stdownloads.aspx.
We also have Washington Sales Tax Rate Library (WSRL) source code that provides a sales tax rate lookup using the Department of Revenue's address and rate download files. Its purpose is to provide an example of looking up tax rates using our download files and can be used as a starting point for adding destination-based sales tax rate lookups to your application. For web applications such as shopping carts, you will need to develop a rate lookup service or extend the library to use a disk-based indexing scheme.
We also have tax rates in file formats compatible with specific programs such as QuickBooks and Excel. Online sellers may also be interested in our Excel Workbook tool that operates as a sales ledger to help keep track of sales and the amount of sales tax for each sale. The workbook is available online at http://dor.wa.gov/Content/GetAFormOrPublication/FormBySubject/forms_ExcelWksht.aspx.
Although calculating sales tax by address or ZIP+4 codes is most accurate, we understand that it is currently not possible for everyone. In the interim, the Department's expectation is that sellers will do their best to determine the correct tax rates to collect and to report the sales to the correct jurisdictions when filing their tax returns. If the sales tax collection method used results in the over- or under-collecting of tax, sellers are still required to remit all tax to the Department of Revenue, or if requested, refund the over-collected tax to the customer.
As we continue to develop solutions for e-commerce businesses, please also consider the following options:
- Contact your shopping cart vendor directly: Find out what they can offer or suggest a solution that they could consider incorporating into their software.
- Investigate other shopping carts: The demand for these services is high, and new solutions are emerging in the market place. Your local business association may be able to give you specific solution providers.
- Consider using a Certified Service Provider (CSP): These are companies that have been certified by the National Streamlined Sales Tax Organization to act as agents in performing a seller’s sales and use tax functions. Their services are designed to allow sellers to outsource most of their sales tax administration responsibilities. Currently, there are six companies certified, Accurate Tax, ADP Taxware, Avalara, Exactor, Fed-Tax, and Speedtax. For more information about certified service providers, please see the National Streamlined Sales Tax website.
- Use our customer database conversion service: If you have a consistent customer database, the Department’s database conversion service may be helpful. Businesses with a consistent customer database can submit their customer address file/database through a secure transfer method, and we will provide the corresponding tax rate and location code for each address.