Glossary
Sales tax by ship-to
Sales tax by ship-to means the tax on an order depends on where it ships to, not where the warehouse sits. In QuickBooks mode, QuickBooks calculates the tax and returns it, and DockingWare stores what QuickBooks returned.
What it is
Sales tax by ship-to means the tax on an order depends on where it ships to, not where the warehouse sits. A shipment to one state taxes at that state’s rate. The same product shipped to another state taxes at that state’s rate, or not at all if the customer is exempt.
The tax is merchandise tax on the line nets, not on the list price. Discounts come first, then tax applies to what is actually charged.
Why it matters
Tax follows the destination. A warehouse that taxes every order at its own state’s rate overcharges some customers and undercharges others, and both errors surface later: one as a refund, the other as a bill from the state. Getting the ship-to state right on the order is what keeps the tax right on the invoice.
Exemptions matter just as much. A reseller with a valid certificate does not pay sales tax, and a system that taxes them anyway creates a dispute on every order. The certificate, with its expiry, belongs on the customer, where the order can read it.
A worked example
A fictional customer in Texas orders 40 dozen of SKU WDG-1040. The order ships to Texas, so the Texas merchandise rate applies to the line nets. The same customer, shipping the same product to a state where the company has no rate, carries no tax on that order. A second customer with a valid resale certificate, shipping to Texas, also carries no tax, because the exemption travels with the customer.
How DockingWare does it
Company settings carry one merchandise rate per ship-to state, or an exempt mark. Customer and product each get a taxable flag, and the customer gets a resale certificate number with an expiry. In QuickBooks mode, QuickBooks calculates the tax and returns it, and the tax QuickBooks returned is stored on the DockingWare invoice.
Questions
- What is sales tax by ship-to?
- The tax on an order depends on where it ships to, not where the warehouse sits. Two orders for the same product can carry different tax because they ship to different states.
- Who calculates the tax in QuickBooks mode?
- QuickBooks does. DockingWare sends the net line amount, QuickBooks returns the tax, and the tax QuickBooks returned is stored on the DockingWare invoice.
- What about exempt customers?
- A customer can carry a resale certificate number with an expiry. While it is valid, the customer is exempt, and the order carries no tax for that customer.