I have tax rules for 1 US state in my Magento store configured. If shipping goes within our state, then the tax will be applied, for all other states the tax will not be applied.
The problem is when I add a product to the cart as a guest, it displays and includes the tax by default.
When I select a state other than our state and click on Get a Quote in Estimate Shipping & Tax section, only then it removes the tax details from the cart.
This is a huge problem and misconception, because many potential customers get the idea that they will be charged sales tax even though they live in another state and would usually not be charged any tax.
That causes probably 50% of all potential customers to go shop somewhere else where they don't get to see the tax before they even entered their shipping address.
I see tons of potential customers with full carts leaving right on the cart page.
I need by default, that there will be no tax displayed and included in the grand total of the cart page. Only when a customer selects our state and clicks on Get a Quote it should display the tax details on cart total.
If this is not possible, then the tax and grand total needs to be removed from the cart page.
In the admin, I have Include Tax In Grand Total, Display Full Tax Summary, Display Zero Tax Subtotal, etc all set to No.
I read somewhere that this is a long standing design flaw / bug. Was this ever fixed? Or is this an issue caused by my theme? How can I finally fix this major issue?
Theme is a very well known and free package: Pagayo Theme Electronics Online.
Best Answer
If you are charging tax for only one state, rest 49 states are tax free, show your prices in the website without tax(label it - tax exclusive price).And you claim 50% potential customers are from tax free regions.
When the customers select the shipping address with taxable state, they are the only one charged with tax. Rest all the customers won't get the tax calculations.
You can control this in System->Configuration->Tax .
Magento can't decide the tax until the customer select their shipping address.