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Tax Discrepancy on Shipping

WCMp Core

Tax Discrepancy on Shipping Resolved

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    • #116279
      redilson
      Participant

      Hi WCMP team,

      We’ve come across a discrepancy with tax on shipping. This will be a multiple layered message to help you find the bug. We have tested this on the standard WordPress 2020 theme to confirm.

      When an order happens that calculates sales tax, sales tax amounts are also being added to the shipping amount (no matter if it is required or not) yet it is only adding the sales tax shipping into the sub order (not actually charging the customer for that additional sales tax shipping cost), therefore it not only creates an incorrect sub order, but it incorrectly calculates the commission that should be paid out to vendors (often by just a few cents) because of a perceived higher order amount.

      For example: This location has a 6% tax rate. The master order calculated sales tax correctly, yet the sub order is $.36 HIGHER than the master order and what the customer was charged. It does not show up in the sub order amount, but 6% of the $6 shipping. This theory has been tested on several orders on different sites and the WP 2020 theme, and it holds true. I have removed customer information from these screenshots.

    • #116284
      redilson
      Participant

      In addition on another site, this order SHOULD charge tax on shipping as required by the area, and is indicated in the tax rates. However, the customer was NOT charged for shipping in their order, yet it was included in the sub order (visible this time), once again making the sub order incorrect from the master AND providing incorrect commission amounts. This order was off by the difference of $.68 as seen in the sub order sales tax amount. I’m attaching the sales tax rate settings and the Master/Sub order.

      Thank you for looking into this and your continued efforts on this plugin.

    • #116289
      redilson
      Participant

      Sorry, accidentally missed attaching the Master Order for this 2nd example. See attached.

    • #116365

      Our team is looking to it and will update you by tomorrow.

    • #116487

      Hello,

      We have tested it at our end and we cannot find any such issue as you can see here (https://www.loom.com/share/da81961a86dd4676844bf805b0943578).

      Can you please provide me with detailed steps on how to recreate the issue at our so that we can test the same.

    • #116535
      redilson
      Participant

      Hi,

      The example you showed doesn’t have shipping charges on the order…that’s where the discrepancy lies.

      When an order happens that calculates sales tax, sales tax amounts are also being added to the shipping amount (no matter if it is required or not) yet it is only adding the sales tax shipping into the sub order (not actually charging the customer for that additional sales tax shipping cost), therefore it not only creates an incorrect sub order, but it incorrectly calculates the commission that should be paid out to vendors (often by just a few cents) because of a perceived higher order amount.

      Thank you!

    • #116588

      We have tested it at our end and its working fine as you can see here https://www.loom.com/share/ffe2d0cb217d41189198f7dc575273a3

      Kindly check the same at your end and let us know.

    • #116625
      redilson
      Participant

      Thanks for checking. I set up exactly what you have and it helped me further pinpoint the problem.

      For vendors, their shipping rates default to Non-Taxable on their side. See attached. But, on the Admin side, we have the Vendor Shipping method for the zone as taxable. As a result, the master Woo order is listening to what the vendor has set and only charges tax on shipping if they have it set. However, since the master Admin setting for Vendor Shipping is set to taxable, it’s placing tax onto the sub orders for the shipping. That what is causing the Master Order to be different.

      So, if you have every vendor marking all their methods correctly and the Vendor Shipping method matches, it all works correctly. Which is great. However, it’s not feasible to be able to check each and every method vendors are using (especially sites with a lot of vendors). They could also change it at any time (from taxable to non-taxable) and you wouldn’t have a way to know.

      Here is a list of problems that occur if the vendor’s tax on shipping is different than what is set at the Vendor Shipping method level:

      1) Vendor’s method is set to non-taxable. Vendor Shipping in shipping method set to taxable.

      Master Order doesn’t charge tax on shipping, but tax on shipping IS applied to the sub orders causing incorrect commissions.

      2) Vendor’s method is set to taxable, but Admin has it set to Non-Taxable

      Master Order doesn’t charge tax on shipping, but tax on shipping IS applied to the sub orders causing incorrect commissions.

      ——–

      So, there’s no way for it to always match because the vendor has the ability to change it and it always defaults to Non-Taxable. What if one vendor chooses shipping to be taxable and another doesn’t, while the admin setting is set to either taxable or non? If you a customer buying from a state that requires tax on shipping, you’d wouldn’t be charged correctly and the vendors would get incorrect commissions.

      I believe you’d always want to have the shipping tax setting follow what is set for the Shipping Method from the Admin, not what the vendor selects for shipping on tax. The vendor setting should be ignored. Or, there would need to be a setting that determines if you listen to what the Vendor has set for shipping taxes OR if you do it based on the shipping method setting.

      Would be curious on your thoughts on this as it’s complicated based on the type of marketplace you run. As a marketplace facilitator in the U.S., we are required to collect and remit tax based on certain states and on top of that, some states do and don’t require tax on shipping. Hence why we have to set them and came across this issue.

      Thanks again for your help and great work.

    • #116804
      redilson
      Participant

      Hi WCMP team,

      Since it’s working if you have the tax zones set with shipping, you can go ahead and close this. We use Avalara so we are going to have to custom develop something that will allow it all to work together properly. Thank you for the assistance.

    • #117224

      Sorry for the delay in response. Somehow we missed this thread among other threads.

      This will require a lot of testing. So kindly allow us one day of time.

    • #118204
      redilson
      Participant
      This reply has been marked as private.
    • #118239

      Thank you, based on your confirmation we are marking this thread closed.

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