Manage Sales Tax Settings for Square Online Orders

The automatic tax calculator will charge US sales tax based on the following:

• all tax registrations you’ve added to your Square account
• where you fulfill an order

A tax registration state is one where you have a business presence. This could be your storefront, home office, warehouse, or a ship-from location. When charging taxes, let’s say you have a physical store in California, but you also ship orders from a location in Arizona. The automatic tax calculator will account for rates in both California and Arizona since you have a business presence in both of these states. This means only orders shipping to Arizona and California will include taxes. Orders shipped to other states would charge no tax.

The most important thing to remember about US taxes is that you only need to collect them if you have a business presence in the state that you’re shipping or fulfilling an order to. If you don’t, you don’t collect taxes.

Note: When a customer has different billing and recipient (like shipping) addresses, only their recipient address matters in terms of charging tax. For orders that’ll be picked up or locally delivered to the customer, local sales tax will be added accordingly.

For accurate tax calculation on shipping and other distance orders placed on your Square Online site, you must first add tax registrations to your Square account. We’ve preconfigured your tax registrations based on your Square locations (and other tax locations previously configured in Square Online), but you can always add more. Learn more about creating and managing your sales tax settings for details on adding new tax registrations.

Two different methods are available for determining which tax rate to apply:

• Automatically generated tax rates: The automatic tax calculator is used for shipping (and other distance orders) in order to apply the different necessary tax rates based on your tax registrations and the recipient’s address.
• In-person sales tax rates: In-person sales are typically taxed based on your sales location (like your restaurant), using the same configurable tax rules applied to other Square products like Point of Sale.

These methods are applied based on how your orders are fulfilled:

• Shipping and non-physical items: Only automatically generated rates are available.
• Local delivery: You can choose either in-person or automatically generated rates.
• Pickup and QR code ordering: Only in-person tax rates are available (unless you previously had automatic taxes configured within Square Online).

After setting up your tax registrations, you can use the automatic tax calculator. To automatically calculate US taxes for Square Online shipping, local delivery, and non-physical item orders:

1. From your Account & Settings page, go to Business information > Sales taxes.
2. Under “Shipping and delivery taxes,” select Manage settings.
3. Under the shipping/non-physical or delivery sales taxes sections, select Apply automatically generated tax rates.
4. Select Save when finished.

Note: Automatic tax calculation isn’t available for non-distance orders like pickup and QR code ordering.

Instead of using automatic tax calculation, you can use your in-person tax settings for pickup, local delivery, and QR code orders. To configure which fulfillment methods your in-person taxes apply to:

1. From your Account & Settings page, go to Business information > Sales taxes.
2. Under “Shipping and delivery taxes,” select Manage settings.
3. Under the local delivery section, select Use in-person rates for delivery sales taxes.

Note: In-person taxes aren’t available for shipping orders. If you previously used automatic taxes in Square Online for pickup or QR code orders, you may also see these sections on the Sales taxes page. If so, select Use in-person rates for Square Online sales tax for each of those fulfillment methods.

To make setting up and managing your tax settings easier, we have migrated your Square Online tax settings from the Square Online Overview page to the Account & Settings page in Dashboard. Now you can set up and manage all of your Square sales taxes in one place.

No, all sellers using the automatic tax calculator and/or “item level tax rates” are being automatically migrated to the new, converged tax settings experience in Account & Settings.

You shouldn’t need to take any action or see any changes to how taxes are applied to your orders. If tax calculation doesn’t appear correct for an order, please visit your sales tax settings to confirm they’re set up as you expect.

In Square Online tax settings, enabling “item level tax rates” for pickup, local delivery, or QR code orders applied your in-person Square sales tax configuration to those orders. With the new, converged tax settings experience in Account & Settings, you can do the same thing by simply setting these fulfillment methods to use in-person rates. Your old “item level tax rate” configuration has been automatically migrated to these settings.

Manual overrides of the US automatic tax calculator are not supported in Account & Settings since the new automatic tax calculator has higher accuracy. The manual option will be removed, after which you’ll receive the converged experience described here.