AutoFile: Wholesale, Exempt and Untaxed Transactions
TaxJar supports product taxability for these integrations so that you can enroll in AutoFile to file your Sales Tax Returns accurately!
In this article, we discuss specifically how TaxJar and our AutoFile service supports your wholesale, exempt and untaxed transactions:
- How does AutoFile support exempt and untaxed transactions?
- What about my wholesale or sales to exempt customers?
- When do I need to categorize my transactions in order to be supported by AutoFile?
- How does AutoFile handle untaxed transactions?
How does AutoFile support exempt and untaxed transactions?
- Our Reports are based on the transaction information TaxJar's system receives from your cart.
- If you don't collect sales tax on a transaction, our system will see that the sale is untaxed, and without further categorization, we're not able to see an explanation that tells us why a particular item was untaxed.
- For this reason, AutoFile is based on the Expected Sales Tax Due Report in your account.
If you sell using these carts, we strongly recommend you categorize your exempt items inside of your TaxJar account so your TaxJar Reports will recognize your Product Tax Codes and exclude your exempt sales.
- We show you how to do this here.
- If you have a combination of unsupported carts connected to your TaxJar account, you will not be able to use the product taxability feature until we support exemption categorization for all carts you have linked to TaxJar
- If you have an unsupported cart connected to your TaxJar account, you can still use our Actual Sales Tax Report to file your sales tax returns manually.
- Options for other Linked Accounts are coming soon so please let us know if you'd like to be notified when your cart is fully supported!
- Please note, this does not affect customer-exempt categorization as we discuss next!
What about my wholesale or sales to exempt customers?
No matter what cart you are using, if you sell wholesale items or make sales to exempt entities such as government or educational institutions, you can mark those as exempt in your Reports by designating those individual transactions in your TaxJar account as exempt.
- See how to designate individual wholesale exempt transactions in TaxJar here.
- If you're using the TaxJar API, you can classify your wholesale orders and items sold to tax-exempt organizations via the API.
- You can also designate exempt transactions due to wholesale, resale, or exempt entities via CSV file upload.
- Once you categorize your sales due to customer exemption, our Expected Report and therefore AutoFile will reflect these transactions as sales tax exempt!
When do I need to categorize my transactions in order to be supported by AutoFile?
You'll need to make sure your exemptions are applied while the Report is open and editable BEFORE your Report is locked for filing.
- We have more information on this process and timeline here.
How does AutoFile handle untaxed transactions?
If you are not yet able to categorize your exempt products and if you enroll in AutoFile, we will view all of your transactions as taxable when we file your returns.
- This means we'll report to the state that all of your sales during your entire filing period should be taxed, which will result in filing a payment that's closer to the estimate you see in the Expected Sales Tax Due Report, rather than the amount you see in your Actual Sales Tax Collected Report.
- If you're currently selling (or plan to sell) a large amount of exempt or nontaxable items, this may calculate a much higher total of what's owed and you'll end up paying the uncollected taxes out of pocket on all transactions.
- We're working on ways to better support exempt product categorization for more carts moving forward.
For now, if you have a large number of untaxed or tax-exempt items and are unable to designate them as tax-exempt in TaxJar, we suggest that you file a manual return rather than enrolling in AutoFile at this time.
- Remember that all users can classify wholesale orders for AutoFile using the method here!