What do I do if the same service is taxable in one state but is NOT taxable in another (Assuming the company services 2 states in this example)?

 

Ask the following questions:

1. What are the services that are taxable in State X but NOT taxable in State Y?
2. What are the services that are taxable in State Y but NOT taxable in State X?
3. What are services that are taxable in State X AND State Y?
4. What are services that are NOT taxable in State X AND State Y?

1. What are the services that are taxable in State X but NOT taxable in State Y?

• Find the service in Admin > Products & Services
• Ensure an active version of the service exists where the “Taxable” and “Ignore All Services Taxable” flag is off
• In Admin > Sales Tax set the “All Services Taxable” flag to true for State X.

2. What are the services that are taxable in State Y but NOT taxable in State X?

• Currently no good solution. You would have to create 2 different versions of the service in Admin > Products and services

3. What are services that are taxable in State X AND State Y?

• Find the service in Admin > Products & Services
• Ensure an active version of the service exists where the “Taxable” flag is on

4. What are services that are NOT taxable in State X AND State Y?

• Find the service in Admin > Products & Services
• Ensure an active version of the product exists where the “Taxable” is OFF but the “Ignore All Services Taxable” flag is ON

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How the Tax Logic Works

The system uses a two-level approach: a general rule for the state, and a specific override on each service.

1. State-Level Rule: In Admin > Sales Tax, we can set a state (like Washington) to make all services taxable by default.
2. Service-Level Overrides: In Admin > Products & Services, each service has two checkboxes that can override the state-level rule:
   • Taxable: This forces the service to always be taxed.
   • Never Taxable or Ignore All Services Taxable: This forces the service to never be taxed, regardless of the state's setting.

The key is what happens when neither box is checked. If both boxes are unchecked, the service simply follows the state-level rule.

The Solution for Duct Cleaning

To achieve your goal, we need to set it up like this:

Service / Setting	In Washington (WA)	In Idaho (ID)
State Rule	All Services Taxable is ON	All Services Taxable is OFF
Duct Cleaning Service	Taxable & Never Taxable are both unchecked	Taxable & Never Taxable are both unchecked
Result	Tax is applied (follows WA rule)	No tax is applied (follows ID rule)

Action Plan if you are needing to turn this on:

If the All Services Taxable flag for your State needs to be turned on. To ensure a smooth transition, we need to follow these steps in order:

1. Review your products and services: Look at services where both tax boxes are unchecked. When we re-enable the State setting, all of these will become taxable in that State.
2. Confirm Service Settings: Please look over the list from step 1 and confirm if this change is correct for all of them. If any service on that list should not be taxed in the State, you will need to re-create the service and check the Never Taxable box.

Important Next Step: Updating Future Jobs Before we activate the main State tax setting, we also need an engineer to update all scheduled future jobs. Any jobs that already have the old, incorrectly-taxed services will be updated with the newly created, correctly-taxed versions. This ensures that every future invoice will be accurate from day one.

1. Final Activation: Once you have reviewed the list and confirmed the settings are correct, please let us know. We will then schedule the engineering task to update all future jobs. After that is complete, we will flip the All Services Taxable switch for that State.