Delivery Fees and Service Charge Taxes Issues

[makedonas]

I had recent and very expensive State Sales Tax Audit and I discovered that most "set" Service Charges are taxable in Missouri, unless it's an optional Service Charge (Example: Server Tips and Delivery/Courier Tips).
I've made a number of adjustments already, but there are still some issues. 
Under Fulfillment > Pickup & Delivery > "Location" > Delivery & service fees > Service Fee > There is toggle for "Charge a service fee for on delivery orders".
This fee shows up as "Service Charge" on Square Online order tickets and it's not being taxed and there is no option to make it taxed. 
There needs to be an option or toggle to have this taxed. I'm sure there are many other States that this is required. 
I also have an issue with Square Online Delivery fees not being taxed too. 

Account Settings > Payments > Sales Taxes > Shipping and Delivery Taxes > Manage Settings > Use in-person rates for delivery sales tax > Apply tax to delivery fees ** This isnt working **

The audit was for 2.5 years, and 2.5 years of these fees not being taxed (and not having a clear way to adjust) has cost me a LOT of money. 

I was told this would need to be a Feature Request.
This would seem to be an extremely urgent and important Request/Fix, since it applies to many others that are probably unaware.

Custom Service Charges (under Account Settings > Payments) have options to apply taxes or not,  and work correctly.

[RobynR]

Hey @makedonas, Thank you for sharing this observation! Have you enabled item-level taxes for these fulfillment types before setting up automatic service charges?

[makedonas]

Yes I have. 

[RobynR]

@makedonas Thank you for confirming! I've seen sellers experience this issue before, and in most cases, it was due to certain settings not being enabled.

For the steps you’ve provided above, can you confirm that the following settings are enabled? If possible, please provide a screenshot so we can take a closer look:

1. "Charge a service fee for on delivery orders"

   • Navigate to Fulfillment > Pickup & Delivery > [Your Location] > Delivery & Service Fees > Service Fee
   • Ensure the toggle for "Charge a service fee for on delivery orders" is enabled.

2. "Apply tax to delivery fee"

   • Navigate to Account Settings > Payments > Sales Taxes > Shipping and Delivery Taxes > Manage Settings
   • Check that "Use in-person rates for delivery sales tax" and "Apply tax to delivery fee" are both enabled.

Let us know if these settings are active or share a screenshot to help us pinpoint any potential issues!

[makedonas]

 

 

the toggle for "Charge a service fee for on delivery orders" is only available for the “Apply automatically generated rates” option. 
and it states the following underneath: 
“If you charge a fee to your buyers on delivery orders, you can collect taxes on this fee. Only available when using automatically generated rates for delivery sales taxes.”

I also confirmed that it does indeed charge tax for the “automatically generated rates” option. 
the issue is that I’m in Downtown Springfield and our rate is .50% more than the Missouri rate (which is used for the automatically generated rate)