Tax Class, Tax Codes, Product Types Comparison

To ensure products are taxed appropriately, it will be mandatory that all products have a Tax Class (fallback taxes if no compliance integration is active). Additionally, if a compliance integration is enabled, Avalara Tax Codes or ShipCompliant Product Types can also be added.

Tax Classes

Tax classes are used within WineDirect as a fallback tax rate in case an Avalara or ShipCompliant integration is not active.

To view, add, or edit classes in WineDirect, go to Ecommerce > Settings > Setup > Tax > Basic Tax> Edit > Tax Classes. 

We've included some tax classes automatically. By default, WineDirect assigns all products to a single class, the default tax class.

If you are selling products that require different tax rates, such as perishable and non-perishable goods, you can create those tax classes here.

To create a new tax class, click the + button. You can also delete tax classes by clicking the - button, but recommend keeping all tax classes and assigning them a rate of 0% if you aren't using them.

ASSIGNING TAX CLASSES TO PRODUCTS

Once the tax classes are created, you must update your products to indicate which tax class they belong to. For example, you would update your Event Ticket products to the "Non-Taxable Products" tax class.

Once a Tax class is created, it can be selected under Products > Add/edit product > Pricing > Tax settings > Tax Class.

SHIPPING AND GIFT WRAPPING TAX CLASSES

You will have a Shipping and a Gift Wrapping tax class by default. These are for merchants who must collect taxes on shipping or gift wrapping. Even if you are not collecting Tax for these, do not delete them.

If you are not required to collect taxes on these, set the tax rate to 0% in all your zones.

If you are required to collect taxes for either of them, you will set the rate as needed within the appropriate zone, just as you would a product tax class.

When editing your Tax Settings, there are fields for the Shipping, Handling, and Gift Wrapping tax classes. These should be set to their corresponding tax class. If they are set to something else, your shipping, handling, and gift-wrapping taxes will be charged at the rate specified for that other class.

IMPORTANT NOTE: Learn how to set up Tax Classes, Tax Zones, and Tax Rates HERE.

Avalara Tax Codes

If WineDirect is connected to Avalara as the chosen compliance integration within a product's pricing profile, it will be mandatory to select a Tax Code. These are specific code codes created by Avalara to deliver specific tax rates for specific products.

To add an Avalara Tax Code, sign into WineDirect > Products > Add/edit product > Pricing > Tax Code.

Each tax code has a unique description of the product or service that it represents. You can find the product-appropriate codes in the Avalara Tax Code Search tool.

Anatomy of an Avalara tax code

Most Avalara tax codes comprise eight characters: two letters and six numbers.

• The first letter indicates the tax code type (P for products, D for digital, Fr for freight, S for services, O for other).
• The second letter indicates the tax code category (for example, C for clothing).
• The six numbers indicate subcategories under the tax code category.

ShipCompliant Product Types

If WineDirect is connected to ShipCompliant as the chosen compliance integration within a product's pricing profile, it will be mandatory to select a Product Type. These are specific codes created by ShipCompliant to deliver specific tax rates for product categories.

To add a ShipCompliant Product Type, sign into WineDirect > Products > Add/edit product > Pricing > ShipCompliant product type.

IMPORTANT NOTE: Event tickets are an example of a MerchandiseNonTaxable product type. TaxableMerchandise could be clothing or customized glassware.