Configure sales tax for online orders
This article provides an overview of sales tax group selection for different online order types using either destination-based or customer account-based tax settings.
You may want your e-commerce channel to support options like delivery or pickup for online orders. The sales tax applicability is based on the option selected by your online customers.
Destination-based taxes for online orders
In general, taxes for online orders that ship to customer addresses are defined by the destination. Every sales tax group has a retail destination-based tax configuration in which your business can define destination details, such as country or region, state, county, and city in a hierarchical form.
Configuration for Retail destination based tax can be found in the Tax module > Indirect taxes > Sales tax > Sales Tax Groups section.
Orders delivered to customer address
When an online order is placed, the Commerce tax engine uses the delivery address of every line item in the order and finds sales tax groups with matching destination-based tax criteria. For example, for an online order with a line item delivery address to San Francisco, California, the tax engine will find the sales tax group and sales tax code for California and then calculate tax for each line item accordingly.
Order pick up in store
For order lines with pick up in store or curbside pickup specified, the tax group from the selected pickup store will be applied. For details about how to set up sales taxes for a given store, see Set other tax options for stores.
Customer account-based taxes for online orders
There may be a business scenario where you want to configure a sales tax group on a specific customer account in Commerce headquarters. There are two places in headquarters where you can configure sales tax on a customer account. To access these, you'll first need to get to a customer detail page by going to Retail and Commerce > Customers > All customers and then selecting a customer.
The two places where you configure sales tax for a customer account are:
- Sales tax group on the Invoice and delivery FastTab of the customer details page .
- Sales tax on the General FastTab of the Manage addresses page. To get there from the customer details page, select a specific address under the Addresses FastTab and then select Advanced.
Tip
For online customer orders, if you only want to apply the destination-based taxes and avoid customer account-based taxes, ensure that the Sales tax group field is empty on the Invoice and delivery FastTab of the customer details page. To ensure that new customers who sign up using the online channel do not inherit the sales tax group settings from default customer or customer group settings, ensure that the Sales tax group field is also empty for the online channel default customer settings and customer group settings (Retail and Commerce > Customers > Customer groups).
Determine destination-based tax or customer account-based tax applicability
The following table explains whether destination-based taxes or customer account-based taxes are applied for online orders.
| Customer type | Shipping address | Customer > Invoice and delivery > Sales tax group? | Address on customer account in headquarters? | Customer address > Advanced > General > Sales tax group? | Sales tax group applied |
|---|---|---|---|---|---|
| Guest | Manhattan, NY | No (blank) | No (blank) | No (blank) | NY (destination-based taxes) |
| Signed in | Austin, TX | No (blank) | Yes | None New address added via online channel. |
TX (destination-based taxes) |
| Signed in | San Francisco, CA (Pick up at store) | Yes (NY) | Not applicable | Not applicable | CA (destination-based taxes) |
| Signed in | Houston, TX | Yes (NY) | Yes | Yes (NY) New address added via online channel and sales tax group inherited from customer account. |
NY (customer account-based taxes) |
| Signed in | Austin, TX | Yes (NY) | Yes | Yes (NY) New address added via online channel and sales tax group inherited from customer account. |
NY (customer account-based taxes) |
| Signed in | Sarasota, FL | Yes (NY) | Yes | Yes (WA) Manually set to WA. |
WA (customer account-based taxes) |
| Signed in | Sarasota, FL | No (blank) | Yes | Yes (WA) Manually set to WA. |
WA (customer account-based taxes) |
Additional resources
Set up taxes for online stores based on destination
Sales tax calculation methods in the Origin field
Sales tax assignment and overrides
Whole amount and Interval calculation options for sales tax codes