Re: Can someone explain how sales tax works in the US.

[Lawrence]

A general sales tax solution in US is a very complicated thing.  Best to 
have it configurable.

In the US there are 9 home rule states. California, Colorado are two, 
the others I can not remember. Home rule  states can levy taxes by what 
every geographic area  suits their ends -- usually by county. For 
example, if district (a tribe of individuals)  decides they would like 
to build a library, they could mandate that merchants, telephone 
companies and whoever is in their defined geograhic area,  pay a special 
"building library tax."  

A good link to read more about US taxes is here :
  http://www.vertexinc.com/

Vertex at one time was the only "general" software available. They 
calcaulate taxes by a "geocode."  Geocodes partition areas by zipcode. 
However zipcodes are highly standardized. So they Vertex hashes them to 
a Geocode; thus making it difficult for one to reverse engineer their 
software.  Even though geocodes and zipcodes are not an exact mapping 
of  tax rates to a tribes defined taxing area,  tribe elders are happy 
when you send them tax money. For they themselves cannot figure out how 
to verify that taxes are being collected accurately.

There are clever US individuals who have discovered that taxes are based 
on zipcodes and have moved their postoffice boxes to  a lesser taxed 
area. These noncomforming individuals are probematic.

This information may be quite dated as I have not looked into this for a 
while.
 

Lawrence