Tennessee Hemp Law now requires to charge a 6% hemp tax. How can you apply this online?

[AnthonyTHC]

Starting July 1st, 2023, the state of Tennessee is requiring sellers to charge a 6% hemp tax on all hemp-derived products. I know how to add this on the Square side of things. I'm having trouble figuring this out on the online (weebly) side of things. 

If this is not an option, will Square/Weebly add this function? Due to all the hemp accounts in Tennessee using the same system for online sales requiring this hemp tax to be charged. 

Any help would be greatly appreciated. 

[TheRealChipA]

Hi @AnthonyTHC.  Sorry I didn’t answer this sooner.  I thought I had, but noticed today I forgot to post it!  Sigh.  Anyway….

Go to Online -> Shared Settings -> Sales Taxes.  Instead of using Order level tax rates (at the top), you are going to use Item level tax rates.  Item level tax rates use the same tax structure that you have already set up on your POS, which I think is what you want to do.

First, click Edit on the Order level tax rate and remove TN.  Then save that.  Then scroll to Item level tax rates and turn on whatever applies — pickup, delivery, self-serve, etc.

Now when you make any future changes to POS sales taxes, these should be mirrored in your online store.

Let me know if you have any other questions.

[AnthonyTHC]

Hey Chip!

Thanks for the reply. Correct me if I’m wrong but it looks like the Item Level Tax Rate only applies to pickup, delivery, or self-serve orders. 

That unfortunately does not help with this issue 

[TheRealChipA]

@AnthonyTHC.  No, you are correct.  Orders that are shipped use the order level tax rates.  This is because when you are shipping items, sales taxes are supposed to be added based on the destination state’s sales taxes, NOT on the origin state’s sales taxes. Anyway, my solution wouldn’t work for shipping.

I have a question.  If you are shipping THC products to other states, what sales tax are you charging?  For example, if you were shipping to me here in Kentucky, do you charge sales tax at 7% and remit it to Tennessee each month?  Or do you change Kentucky’s 6% and remit that to Kentucky each month?  You are supposed to do the second one.  It gets complicated quickly, which is why most interstate retailers use third-party Square Apps like Davo or TaxJar to manage sales taxes and keep them legal and in compliance.  Shipping customers are supposed to pay sales tax based on where they live, not on the location of the business they purchased from.  Also, apps like TaxJar constantly monitor sales tax changes and figure those in as sales are made.

[AnthonyTHC]

So to answer your question. We do pay sales tax in each state they we make transactions in. Our accountant does all of that wonderful work. 🙂

[TheRealChipA]

Good to hear! Sorry if I was prying. I just wanted to be sure. Every once in a while I run across someone who isn’t doing that. Now…

It seems I’ve struck out. I keep running into dead ends trying to do this. I’m going to have to punt and recommend you call Square Support. I read that you have to start charging this today, a holiday weekend. Ugh. But hopefully they can resolve this for you pronto. I’ll think about possible short term work around and let you only if I hit on one. 

[TheRealChipA]

@AnthonyTHC I have a question about this tax.  Is it only charged to Tennessee customers — a consumption/sales tax in the state?  Or, are you required to charge it to all customers, which would make it more like an excise tax?  I’ve been going on the assumption that it only applied to sales within Tennessee and that might be a bad assumption.  Thanks!

[AnthonyTHC]

We definitely have to charge it in store to all hemp-derived products. But for online, to be safe since we're out of Tennessee. I would assume we have to charge it there as well. I've talked to other credible sources in the state and that's what they're doing. I haven't talked to anyone with a square/weebly setup to see what they're doing yet. 

[TheRealChipA]

Gotcha.  The only short-term fix I can come up with is this.  

1. Increase your hemp-derived item prices by 1.06 in your catalog
2. Remove the POS extra tax that you’ve added, for now
3. Then, since you have a good accountant, they can figure back out the “included” tax with a handy dandy spreadsheet, so that they fill out the remittance form correctly and remit the correct extra tax.

It’s not pretty.  But, at least until Square can figure this out, it keeps you compliant.  I’d even recommend adding some verbiage to your shop that says prices now include the new Tennessee Hemp Tax.  I wish I had a better idea, but all of those ran me smack into a brick wall!

Regards,

[TheHiveAdmin]

Actually, Tennessee is an origin-based tax state, which means you ALWAYS charge the 7% tax to any customer, no matter the destination. We're one of 11 states that are set up this way. So since this business is located in TN, the customer would still pay the TN tax rate even if they lived in Kentucky and that's where the goods were shipped to. Hope this helps! Taxes are so complicated sometimes, it's a pain in the butt!

https://www.taxjar.com/sales-tax/tennessee

[TheRealChipA]

@TheHiveAdmin I’m going to tag a couple of Community moderators.  This is starting to sound like it might be an issue that the engineers need to look into.  If so, a moderator should be able to create a trouble ticket and get the ball rolling, especially if Square software is currently handling this particular tax incorrectly.

@_Violet @JJ_ @MayaP 

[AnthonyTHC]

This would be great! Thank you. 

[MayaP]

Hey @AnthonyTHC, thanks for reaching out. I'll be honest the taxes are always super confusing, so I am reaching out to our support team to investigate this further. I will reach out when I have more insight. Thank you @TheRealChipA for flagging this! 👍🙂

[AnthonyTHC]

yes please! Not being able to charge this 6% hemp tax online is a real burden for your Tennessee hemp accounts. Us in particular, we are eating that 6% every month. 🫠