Santa Ana raised its sales tax to 9.25 percent, the highest in Orange County, on April 1. At the same time, many residents of North Tustin, which shares the 92705 zip code with a portion of Santa Ana, reported that they, too were being assessed the higher tax primarily by businesses that they dealt with by mail.
Foothill Communities Association (FCA) President Rick Nelson spoke to the state tax board, which, he reports, is more interested in collecting taxes than excusing them. He did, however, locate a website, gis.cdtfa.ca.gov/public/maps/TaxRates/, where residents can plug in their address and see what the tax is for that area. North Tustin is still 7.75 percent.
The issue of sales tax calculations for online retailers is complex. Vertex Inc.’s end of year report showed that 619 standard sales tax rate changes were made in 2018, with 5,886 new and changed sales tax rates in the past 10 years. It is not efficient, by any stretch, for any business, small or large, to manually calculate sales tax for every one of their online sales. As such, online retailers either maintain their own sales tax engines with resources dedicated to keeping their sales tax data accurate or use someone else’s sales tax engine platform to do the calculations for them, and pay them a service fee to do so.
A taxing task
Three widely-used and very popular examples include TaxJar, TaxCloud and Avalara. When you buy something from a company’s website, based on the street address that you enter for billing, shipping, or both, it is likely that your sales tax is being calculated by one of these behind-the-scenes providers, or a similar service.
The automated tax services provide a page on their website where anyone can enter their street address and determine if their sales tax rate is correct. I visited each site and entered my street address in North Tustin, squarely in unincorporated Orange County, and was careful to use only 92705 (not including the plus-four part of my zip code). All three websites returned the correct sales tax value of 7.75 percent, recognizing that my specific street address is not within the boundaries of Santa Ana.
However, on TaxCloud, I also tried variations of my address, including simply 92705, and 92705 with my plus-four, with no street address. Both times, the website calculated 9.25 percent.
Several of us in the Foothill Communities Association also tested out variations of our North Tustin addresses with Amazon. One of us was charged the incorrect amount of sales tax, to which Amazon responded that we should make sure to include the plus-four on our zip code.
The lesson here is that most ecommerce sites don’t attempt the Herculean task of calculating sales tax on their own, but engage other online vendors. This means that the majority of our online purchases will have sales tax calculated correctly. However, based on the complexity and fluidity of sales tax regulations, prudence would recommend that we make sure to always use our zip code with the plus-four and to double-check the sales tax calculation. If you notice that you were charged incorrectly, contact the seller; they should issue a refund.
Be sure to support your all-volunteer North Tustin Foothill Communities Association to make sure they’re there when you need them. Visit us at fcahome.org/join-fca-now/.
N. Tustin Notes:
by Scott Logue