US State and Local Sales Tax link is unhelpful

The Sales Tax support page, "About taxes for 1Password", has a section on US Sales Taxes (https://support.1password.com/taxes/#united-states). That section has a link, "Find your state and local sales tax rate", which points to https://taxfoundation.org/publications/state-and-local-sales-tax-rates/ . That link is not terribly helpful for me. It appears to be a policy paper by a think tank which reports typical combined state and local sales taxes by state. However, what I want to know is, how much sales tax will I be charged.

I would prefer a page populated by 1Password, which lets me type in a zip code, and reports what sales tax rate AgileBits will charge me.

As an example, my billing zip code is 98230, in Washington state. The think tank policy paper says that the combined state and local tax rate for Washington state is 9.23%. However, on my account's Billing page, it shows no sales tax at all. So is it correct that AgileBits collects no sales tax for zip code 98230? If so, the think tank policy paper does not match what AgileBits actually does. Or should the Billing page show a non-zero sales tax amount?


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Comments

  • @JDLH: I think most outfits farm out all the grunt work of keeping up with the myriad and ever-changing sales tax collection rates and rules. That might be the snag with AB's not showing prospective sales tax amounts assessed to user accounts. They likely have better things for their folks to do than learn and apply the intricacies of the "system" (forgive the gross misuse of the term).

  • BenBen AWS Team

    Team Member
    edited September 2

    Hi @JDLH,

    However, on my account's Billing page, it shows no sales tax at all.

    To clarify: have you input your ZIP code on the Billing page yet?

    It does appear Washington State is one of the places that charges tax on SaaS, so you would likely be subject to the applicable tax here. We have not started to charge tax in WA yet (September 14th is the start date). Until we do, the billing page wouldn't reflect any tax. We're looking at including a tax calculator on the website so folks can get a better idea of what to expect.

    Thanks!

    Ben

  • @Ben :

    I don't see a place to input my ZIP code on the billing page. I do see a place to input a payment card. I have registered a default payment card, with a billing address. The billing address has ZIP code 98230. So, if the sales tax display is contingent on the ZIP code of the billing address of the default payment card, then yes, that is in place.

    We have not started to charge tax in WA yet (September 14th is the start date). Until we do, the billing page wouldn't reflect any tax.

    Oh dear. So AgileBits has rolled out messaging about how sales tax will be charged, and how the Billing page is the place to see what sales tax you are charged, but the Billing page will not display that tax amount until the start date? That seems like an unfortunate sequence.

    It would have been best to have sales tax displayed on the Billing page as of the start data of communication about the sales tax change. Failing that, can you add in a placeholder line, saying something like, "Sales tax: TBD, exact amount displayed starting Sept 14th".?

    With the absence of a sales tax amount or even placeholder, the implicit message of the Billing page is, "you are not subject to sales tax, no worries". It seems that message is inaccurate.

  • BenBen AWS Team

    Team Member

    Thanks @JDLH. I can see how that would help clarify things. I'll bring it up with development and see if there is any way to squeeze a change into the current development cycle. Will try. :)

    Ben

  • Repeat of a post elsewhere:

    Another important issue is the fact that many jurisdictions (e.g., California) do not impose sales/use tax on Electronically Downloaded Software nor SaaS. Would the people at 1Password (which I love and recommend) clarify that they will only collect sales/use tax on transactions that are actually subject to sales/use tax? Thanks!

  • BenBen AWS Team

    Team Member

    Hi @SoccerBot

    If your State does not charge tax for SaaS then updating your billing information will help ensure that you do not get charged tax.

    Ben

  • SoccerBotSoccerBot
    edited September 3

    Hi @Ben

    Thank you for the clarification. It might be worth sending a followup email to users to explain what you just said. The first one didn't make it clear.

    1Password will begin collecting state and local sales tax starting September 14, 2020. Invoices issued before this date will not be affected.

    Because your ZIP code is used to determine the correct tax rate, or whether tax is due, please take a moment to update your payment details to make sure you are charged correctly.

  • @williakz ,

    I think most outfits farm out all the grunt work…

    I agree, AgileBits probably buys the sales tax rate data from some specialist. But surely AgileBits collects the sales tax themselves, at time of purchase. Thus AgileBits must be able to look up the tax rate to charge. If they can look up a rate to collect tax, they can look up a rate to display an informative message about the anticipated rate they will charge.

  • BenBen AWS Team

    Team Member

    Thanks folks. :)

    Ben

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