USA Sales Tax Setup Issues

I found this older post and I’m having the same issues:

The writer of that post laid it out pretty well on how taxes work in the USA.
Items are either taxable, or not (for example, some states, like mine, don’t tax services. Many locations don’t tax fresh groceries, as you need them to survive. Etc). Rates are (usually, and for the purposes of this discussion) determined by customer location. The sales tax item creation in Manager works fine, but I want to be able to assign that rate to a customer, for every item marked taxable on every invoice.

Has there been any progress on making things easier for taxation in the USA?

I will explain a little further, although this is not relevant to my question here, but people may be curious how things work here in the USA. Also, other users may have these situations and need to set things up to work for themselves. A quick way to explain this is, the tax rate is determined based on where the customer is physically located when the sale is made.


  • If you as the business go to your customer as a service provider or traveling salesperson, or sell to them via internet or phone order, taxation generally works as initially explained above - the rate depends on the customer delivery location.
  • If the customer comes to your store to buy immediately, or order something for future pickup or delivery, the rate is then determined by your physical store location.
    – If you have one store, this is very easy as you have only one rate. By default, you could set it as a per-item rate as done in Manager, since it won’t need to change. It will work fine, however, this is still a little foreign to most USA people. Tax is usually totaled at the bottom for all taxable items.
    – If you have store locations in multiple tax rate areas, you would need to handle things on a per-store level and tax rate may change based on store location. Manager (and other programs, even) may not be setup to handle multiple stores in one file like that. I’m not sure as I haven’t had to try this.
  • There are some other edge cases where rates may need to be assigned per item in the USA, but they are rare. Most standard programs that I have seen are actually not set up for this (QuickBooks isn’t) and businesses will rely on their industry-specific POS (Point-of-Sale) system to handle these. However, having the option in Manager is nice for this. You could easily use Receipts for this in Manager.
  • For example, let’s go back to the grocery store:
    – The state does not charge tax on “essential” groceries, but the city does. That is one tax rate.
    – Both the state and city charge tax on other “standard rate non-essential” items, such as paper plates and plastic cups. This would be another tax rate.
    – Liquor and cigarettes are taxed higher (above and beyond the standard product rate) in many locations, call it “alcohol rate” and “tobacco rate”. This would be a third and fourth rate.
    — A business using this setup would have a store where people come to them, and the rate would not depend on the customer - which is how Manager does it now. Great!

Basically, people just need to be able to choose how they want to do it!

To my knowledge, no general purpose accounting program has conquered this problem, especially since a Supreme Court decision a few years ago on internet sales was decided. By one estimate, there are at least 10,800 different sales tax combinations, depending on the seller’s status, buyer’s status, specific item, location of the seller, and location of the buyer (and possibly other factors).

Manager will handle any situation, as described in the Guide about tax codes (with examples). The issue is determining which tax code applies to each line item. If you can solve that, you could become a rich person.

I’m not expecting you (or other programs) to magically know all 10,800 combinations. There are actually services out there that do this though, one of which is Avalara. They literally give you a database and keep on top of changes in local tax codes and then notify you when there’s updates to sync. (I haven’t used them due to cost, so I’m not sure how good they are - but they exist. Integrating with them would be a great thing for the future!)

All I’m saying is, for a lot of people (myself included), tax rate automatically pre-filling based on customer, not item, is what we need. QuickBooks, and others, already do this. It’s a pretty big thing to not have to change each line item per invoice per customer!

@KJabs, the services you mention are not accounting packages. They are tax rate lookup/research utilities.

Your hope for setting one tax code per customer is a vain one. What happens when the customer with one code buys a tax exempt item or takes delivery in a different jurisdiction?

In QuickBooks, you can manually change the tax code for the whole invoice, as well, so if the customer winds up having delivery somewhere else you can account for that. If the item is tax exempt, you mark it as “non-taxable”. That is common. If a single item is taxable in a different jurisdiction, well I’m not sure what you’d do then. I don’t really sell outside of my state. I think you’d have to make a second order for the other jurisdiction. Most platforms need separate orders if a customer is having things sent to two different addresses. Then you would set the tax for the second order on that invoice.

It seems you want Manager to be equal to what you are used to in Quickbooks. It seems that you prefer Quickbooks so why not stick with it if it suits your needs better?

QuickBooks has gotten far too extortionate for my liking. I’m willing to pay for Manager, I’d rather pay literally anyone other than Intuit for products. I like what I’m seeing so far, but there are a few key things that are needed to function. This isn’t just a matter of learning a new system, it literally cannot do what is needed, and it is unfortunate. It is also a standard way of doing things in the USA that many other software packages offer. I’m also obviously not the only person that needs it, as referenced in the linked post in my thread starter. Could I manually do taxes per item on every invoice? Sure, I suppose, but that is very tedious. Even if it cannot be applied to customers, making it apply per invoice would be fine. It could flow like


Or, perhaps there could be a setting in the item for tax rate, =INVOICERATE. Or something.
Then items that do get taxed, can look for the rate in the invoice. Items that don’t, will still have zero. Obviously it would be more complicated than that, but I have to imagine it’s possible when others are doing it.

Imo Managers multipart tax code could be improved by making it a collection of previously defined single tax codes. Doing so would enable creations of standard reports and electronic reporting to major tax authorities.

However due to the very fragmented nature of the USA tax system, I do not believe it is likely Manager would directly support and automated location based look up. I also suspect other USA specific requirements, such as change of delivery address changing the tax codes, has a general enough utility to justify incorporation in Manager. Such changes would need to have value across a significant number of the jurisdictions Manager sell to.

Again, I have no problems setting up the rates on my own and I’m really not expecting Manager to automate location-based lookup. Very few of the other big players do. They could definitely partner with a tax agency and get a huge boost of customers if they did, though.

And many taxes even in the USA are multi-part. Here, I have city, state, and county. I immediately saw how to combine those into one rate to bill out and have it separated on the back end, which is nice. Setting up the rates seems easy. It’s just getting them to apply to an entire invoice or receipt that is more time consuming.

Back to my suggestion, I think the easiest way would be to create an invoice or receipt master override, and then be able to set the item tax code to =invoicerate. Possibly doing so with customers, and have the item tax code set to =customerrate. These could be options in the item tax code drop down, or you could use actual rates like they are done now.

how is that helpful for any other group than the small percentage of USA users?

I wonder what the demographic breakdown is. Hopefully manager will be seeing an influx of US users soon, given how bad the other options are getting here.

Though there is nowhere to enter a tax rate per invoice, Manager does have a feature that helps. I use it to cut down on the amount of clicking and changing:

For the first line-item on the invoice enter the tax code that will apply to all items on the invoice. Don’t enter any other info. Copy the line for as many items as will be on the invoice. Each copied line will have the tax code filled and is ready for an item to be selected.

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The point @Patch was making that one can not expect Manager to be bespoke to specific wants that are not essential but more a convenience to be adopted for any geography. What may be a good to have for one will be a nuisance to another. If anything I am concerned that Manager tries to do too much that is not essential for accounting purposes and bloats the application, making it prone to more questions and possible bugs. To illustrate this, just count the number of possible customizations, settings and form fields (without custom fields). Despite the initial simplicity, this forum shows that Manager quickly can become complicated.

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Actually this could be achieved within a more general solution. Invoice level tax codes have a more general applicability, typically for withholding tax but in the general structure described in this post other tax codes could also be used

Most of the world has now moved to VAT tax schemes where the tax is determined by product level

The complicated tax schemes used in the USA are so labyrinthine that it would make the tax codes in Manager unfathomable for the average user outside of the USA

Ah, great tip, thank you! This is at least a little bit easier than verifying every single item. I will say that if you do assign a tax code to an item, it will override what is pre-existing in the copied line (I tested it by putting a tax rate in an item). In a sense, this is good - labor has 0 tax here, so it will take the rate out of the line for labor when I pre-fill that rate to be no-tax. And I wouldn’t want to pre-fill other sales tax on items anyway, that’s part of my complaint lol.

Some of our US states are bigger than entire European countries. Aren’t there tax change complication issues in Europe going between countries? Anyways, that said: Sales taxes are actually generally pretty easy.

The RATES may be different per location, but HOW the taxes are processed is the same in the entire country. The merchant finds the rate (this is the only an issue if you’re doing multi-location - but again, don’t rates change in different countries?), applies it on top of the purchase price, the customer pays it, and then the merchant remits 100% of the tax to the governing agency.

Most European and other countries do not have multiple layers of tax like the USA

Most economists will agree that VAT is a much better way to tax goods and services than the various layers of Sales taxes used in the USA

Where are you located? I’ll be honest, I don’t think I understand your tax rules enough to understand if that would help in the USA. Neither of those posts make much sense to me. And I’m guessing what I’m asking for here, doesn’t make sense to people outside of the USA, which is logical.

The only things we have withholding taxes for is payroll/income. Our income tax in the USA is definitely complicated, or more accurately, the ways we can write things off against income to lower our tax burden is what’s complicated.

They may not be multiple layers - but are they different rates in different countries? 5% in one, 4% in another? Or is it the same rate across all of the EU? But then if it is, what happens when you go to UK? Is that a different rate?