The purpose of this article is to layout the rules Control uses to lookup which Tax Class and Tax Exempt status to apply to line items and shipment items.

When shipments are involved, the shipment calculates taxes for the portion that is shipped. The line item calculates the amount that is not part of a shipment. So, if you have a line item with a quantity of 5 and a subtotal of $100, and you ship 3 items, the shipment will calculate the tax of $60 and the line item will calculate the tax of $40.

Also, if a line item has child items and any part of the line item is shipped, the taxes will be calculated using the tax settings of the top item and the total price of the top item and all of its children.

The order tax exception and tax class is not used directly by the tax calculations. But are often used as the default values when line items and shipments calculate taxes.

• Is the order using online taxes? If so, use the online tax class.
• Is the tax class overridden by the user? If so, use the overridden tax class.
• Is the store option to use address tax lookup turned on? If so, and the address has a tax class assigned to it, use the address's tax class.
• Is the order using postal code tax lookup? If so, use the tax class based on the ship to postal code.
• Use the company's tax class.

• Is the tax exemption overridden by the user? Is so, use the overridden value.
• Otherwise, are any of the following true:
  • Is the company fully tax exempt (and the tax exemption is not expired)?
  • Is the company tax exempt in the shipped to state (and the tax exemption is not expired)?

• Is the order using online taxes? If so, use the online tax class.
• Is the tax class overridden for the line item? If so, use the line item's overridden tax class.
• Is the store option to use address tax lookup turned on? If so, and the address has a tax class assigned to it, use the address's tax class.
• Is the line item using postal code tax lookup? If so, use the tax class based on the ship to postal code.
• Is the line item a child item? Is so, use the parent item's tax class.
• Use the order's tax class.

• Are any of the following true:
  • Is the order tax exempt?
  • Is the product tax exempt?
  • Is the tax class tax exempt?
  • Is the company fully tax exempt (and the tax exemption is not expired)?
  • Is the company tax exempt in the shipped to state (and the tax exemption is not expired)?

• Is the order using online taxes? If so, use the online tax class.
• Is the store option to use address tax lookup turned on? If so, and the address has a tax class assigned to it, use the address's tax class.
• Is the line item using postal code tax lookup? If so, use the tax class based on the ship to postal code.
• Use the line item's tax class.

• Are any of the following true:
  • Is the order tax exempt?
  • Is the product tax exempt?
  • Is the tax class tax exempt?
  • Is the company fully tax exempt (and the tax exemption is not expired)?
  • Is the company tax exempt in the shipped to state (and the tax exemption is not expired)?