How does CARTLOOM handle sales tax?

We have some products we are considering selling on our website. Managing the money flow is probably the hardest part this endeavor.
This has been made more complicated by some recent changes in tax code.

It used to be we only had to collect sales tax from any state where we have a physical presence. That’s easy because we only have one location. Now, however, we have to collect and remit sales tax to any state we sell product into. Staying in compliance with 50 different taxing authorities effectively kills this opportunity.

Can something like Cartloom accommodate money management for such a random set of taxing structures like this>

Are you selling digital, like download able products?

We have in mind two types of products:

One would be a PDF download and the second would be physical items that would be shipped on a UPS or FEDEX truck.

I don’t believe that cartoon is going to help you out much, other than provide you the means to add taxes to the product purchase.

The change that you are referring to was based on the US Supreme Court (South Dakota v. Wayfair Inc.,) ruling.

That ruling requires the states to enact laws requiring remote sellers to collect and pay taxes. Most of the states that have passed these laws have a minimum threshold that the seller most hit prior to the seller having to collect and pay sales tax

  • a minimum number of separate sales to customers in the state, or
  • a minimum dollar amount of sales to customers in the state,

Right now is a bit of a moving target, but most states have a target > $100,000 a year. Last I checked Oklahoma and Pennsylvania were the only two states that had a < $100,000 threshold.

There was supposed to be proposed federal legislation regarding remote seller sales tax. But I don’t see Washington getting anything done.

So I’d say unless you think you are going to be selling more than $10,000 to a single state you should be Okay.

You could use Paddle for that part.

Is there really a country where you have to collect and pay taxes based on the target address?

Thanks Doug.
I did not know about the minimum threshold part of the ruling.

This is just a project that is on the radar. I came across Cartloom while I was reading some threads about the new Foundation 6 so wanted to ask the question.

It’s my understanding that different state legislatures have the authority to tax these transactions. Being a small business is difficult. Is hard enough to just get your product to the customer without having to also feed 50 potential state legislatures.

The USA now does. Amazon has been doing it for years.

That does work, but because all you have to do is put an Oregon zip code (no sales tax)on the forum and Paddle doesn’t charge you.

I think that’s why most states have a pretty high dollar amount. They aren’t after the small guys. It’s for big companies like Amazon or Wayfair.

As I said, it’s a moving target, but even OK and PA have a $10k limit.

To keep it simple: then only do PDF downloads and let Paddle do the whole digital tax part.

Do you have a US subsidiary?

Here in Florida sellers have to collect sales tax based off of the location that the physical item would be delivered to. :roll_eyes:

Yes, I understand that. I am just thinking that, if you don’t have a US subsidiary, and just ship from let’s say overseas, that you have to deal with that also? I don’t think so.


How do you know what the sales tax rate is for each location and how do you remit the tax to the location? Does your software automatically know the current taxing rates?

In Washington State you also have to list the city where the transaction occurs.

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I don’t sell physical goods myself. That said there are people who’ve put together complex charts for such things online already, which you can purchase, that have the information already. I suspect the information could be compiled manually yourself from public records but that seems like a ton of work.

Here’s a link to some information on interstate sales tax. You’ll find a link to another page with a table state by state. Click on rhe date in that table to find thresholds and effective dates.

You’ll see that most all have a 100k - 500k before you need to collect or pay taxes.

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@cabinetmaker To answer your original question…

Yes, you can use Cartloom to apply different sales tax based on customer address.

For products that do not require tax, you can disable tax on it.

You can setup Tax rules based on Country and or State (region).

This will automatically calculate and apply tax to the checkout total.

I hope this helps answer your question. :grin:

If you need more help with this, please shoot us an email at

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Thank you for responding Yabdab.

As I understand it, your software has provision for someone on my end to input the various tax rates for various districts. Upon selection of a shipping address the tax schedule generates associated taxes for a particular district.

Cartloom does not have anything to do with ascertaining or inputting the individual tax rates.
Cartloom merely provides a mechanism to include them in the billing.

Are these assumptions correct?

Sadly, the European Union requires vendors to apply Value Added Tax (VAT) at the rate applicable in the purchaser’s domicile. This applies to vendors outside the EU selling into it, too. It’s one of the many reasons I voted to leave the EU.

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As far as I know, this is only applicable to digital VAT.

Nothing to comment here :wave: