This article provides an overview of how Shed Suite calculates taxes.

To verify the tax rate our system should use, enter the relevant address at TaxJar's Sales Tax Calculator. TaxJar calculates all applicable taxes in the Shed Suite order form.

Tax Calculation Process

The tax calculation starts with the delivery address. The ship-to address determines which state has the right to tax the sale. Once the state is identified, TaxJar determine whether it follows origin-based or destination-based tax rules.

  • Origin-based states tax the sale based on the dealer’s location (point of sale).
  • Destination-based states tax the sale based on the customer’s ship-to address.

For most transactions, the origin and destination are within the same state. Our system automatically sends three addresses to TaxJar to obtain the correct tax rate:

  1. Point of origin – The dealer’s address.
  2. Destination – The customer’s ship-to address.
  3. Nexus address – Used to determine if you have a business presence in the ship-to state (more on this later).

If the point of sale and the destination are in the same state, the system applies the appropriate tax type and calculates the tax rate accordingly.

Cross-State Sales

Tax calculations become more complex when a sale crosses state lines.

For example, if a sale is created in Tennessee (TN) but shipped to Georgia (GA), the tax rate from GA will apply only if you have a business presence (such as a dealer or shop location) in GA. If you do not have a business presence in GA, our system will not charge sales tax on that transaction (more on this below).

For some sales that cross state lines, the system may not use the customer’s delivery address to determine the tax rate but instead use the nexus address. This is state-dependent.

By default, our system uses the nexus address when a sale crosses state lines. However, you can override this setting using the Tax Behavior Override (found undersettings from the office admin account), which allows you to force the system to use the ship-to address for tax calculations.

Understanding Nexus

Our system will not charge sales tax on an order if it is shipped to a state where you do not have a dealer or shop. If you need to collect tax in that state, you must create a Nexus Dealer.

For example, if you frequently sell sheds into GA from TN but do not have a sales location in GA, you can create a "GA Nexus Dealer" with an address inside GA. This is a virtual dealer location used solely for tax calculations. After creating it, you can deactivate it to remove it from your active dealer list—our system will still use it for nexus tax purposes.

Tax Behavior Override

The Tax Override feature allows you to force the system to use the ship-to address for tax calculations in specific states.

For example, if the customer address is in Georgia, but the dealer is in another state, you can set an override to always calculate tax based on the customer’s address.

Tax on Rent-to-Own (RTO) Orders

For Rent-to-Own (RTO) orders, Shed Suite defaults to using the customer’s ship-to address for tax calculations. This is because:

  • The rental takes place at the customer's location.
  • If the property is transferred at the end of the term, it changes hands at the customer’s address.

However, Rent-to-Own companies have the option to change this behavior in their portal, setting the dealer’s address as the default tax location. This option is rarely used.