Thanks for posting in the Community, @Dpamelar.
I can help provide clarification about the collected sales tax. The calculation is based on the addresses you're shipping from and shipping to. It is how QuickBooks calculates in compliance with the tax agency rates.
I'd recommend consulting your accountant to check if you should need to collect sales tax from San Diego or not.
Should you need other references you can use in the future, please feel free to visit our help site: Income and Expenses for QuickBooks Online.
I'm just a post away if you have any additional questions about sales tax or anything else. Cheering you to continued success.
Strange as it sounds, what it is doing is correct.
Check with your state sales tax dept and you will find that CA has a hybrid sales tax scheme. You collect sales tax based on the destination, but also collect your local city tax on the same sale