PayPal Recurring Contracts Not Paying 2nd and later Sales Taxes

#1

Hi, I’m committed to your fine plugin, but I’m a little frustrated. I’ve written the below question to support@wpsharks.com multiple times.

Here’s the question:

Our Paypal/S2Member-powered website, https://www.UniversityofFashion.com, generates revenues via either Monthly or Yearly subscriptions. Subscribers from NY and CA also need to pay us their state’s sales tax, too.

Monthly subscribers are charged on a recurring basis every month until they cancel. However, while sales tax is included in their first payment, no sales tax is ever included in all their subsequent payments.

Can you tell us how to set S2Member to tell PayPal to add sales tax to our Monthly customers’ second and later recurring payments?

Maybe another way to put it is: How do other companies that use WordPress, S2Member and PayPal handle recurring payments and sales taxes?

On 7/25/18, I sent PayPal an inquiry on this. They got back to me and asked me to call them. I called today. They got one of their engineers involved. He said that S2M initiates all customer charges that PP executes, not PP. He said that when S2M provides the data for a customers first transaction on a Monthly, they create a recurring contract for the customer in Manager and then dutifully charge the customer our $19.95 monthly fee, plus sales tax, if any.

PP then basically waits for S2M to get back to them the following month with instructions to charge the customer for their 2nd month, and so on. If S2M fails to provide PP with a sales tax amount in these subsequent instructions, PP doesn’t add sales tax to those charges.

The engineer suggested we contact S2M support to find out how to make them send sales tax information every time, not just the first time.

On 10/5/18, I asked when you would be able to respond. “Hi, we’re still hoping you will respond to a sales tax question we posed to you last August. See your “we’ll get back to you soon” email below.”

All this, despite receiving a confirmation from you on 8/3/2018, saying "Hello Jeffrey, We received your message! Someone from our team will get back to you as soon as possible. Thank you! The WP Sharks"Team

Please respond to our question. We are literally paying our customers’ recurring sales taxes (after their first payment) ourselves.

Jeff
University of Fashion

#2

Hi Jeff,

I haven’t been in the team for years, but I am familiar with s2Member.

I don’t know why PayPal would need s2Member to remind it of adding the tax each month, if that’s what it told it to from the beginning, or why they’d think one would charge the customer tax only the first time but not the others.

I can’t tell you how to change that in s2Member, I don’t know, although anything is possible. You’re the first one I’ve seen mention this problem.

What I can offer you is what comes to my mind when I put myself in your shoes, trying to get this to work with what I have…

What I’d do, is have a different price for those that you need to tax recuringly, where the tax is included in the subscription amount, and mention it in the description, instead of letting the form do the math and handle it as a separate amount.

This wouldn’t fix the existing subscriptions, and it’d require either having the customer pick the other form himself based on his location, or require you to have the pro-form customized to change the amount when he adds one of those states as his address (I’d look at the taxes code in s2, which already detects that, you’d just be applying a different behavior).

Studying the problem a bit further, I would probably be able to come up with a nicer solution, though. These are rather off-the-cuff.

#3

I found this old post over at Stack Overflow:

Seems to be an old issue. And my solution for it is old, too.

The thing is that s2Member is not the one that manages the subscription, that is managed by PayPal. So it’s always just been “over to you” at checkout, and then it’s s2Member the one that gets payment notifications and other updates from PayPal.

Although that could be developed, until such a time, or when a more elegant solution is found or developed, it’s way quicker and easier for you to just have a separate page for those states, where the price includes the tax in the subscription amount.

I hope that helps!

#4

This is really good stuff, Christian. It still blows my mind that this wasn’t front and center for S2Member given the many businesses using S2Member and WP for their business platforms.

I’ll share your helpful thoughts with our devs.

1 Like
#5

Yeah! It really surprised me too, when I read your post, that after many years of giving support, I never came across one asking about it before.

Well, I’m just glad that solution is not too complicated, and that I could help you with it. :slight_smile:

#6

I know this is an older thread, but I wanted to reply since the landscape has changed lots. SD v. Wayfair has pretty much opened up U.S. sales tax craziness. Even the hosted solutions (Teachable, Thinkific, Podia, Kajabi, ClickFunnels, ThriveCart, SamCart) still don’t calculate U.S. sales tax natively or even support addons that do (e.g., Quaderno, TaxJar, Avalara, Taxamo, etc.).

I’ve talked to @clavaque and know this is on the priority list, but was wondering if you’ve come up with an interim solution.