I have a California Location In LA County. I recently shipped a product to El Cajon CA. The taxe rate charges was only 7.25% (the state rate without the district and municipal taxes) . I looked online and the Sales Tax rate for that city is 8.25%. So it looks like it did not charge the district and municipal takes for that city. How do I fix this? Another question I have is Can I just charge a flate sales tax rate? My tax rate in my city is 10.5% can I just charge that rate for all my instate sales?
My company meets economic threshold for California and I'm having the same problem the system is just Charging the state tax. It's odd because in your tax settings if you click the County link next to California the values in Shopify for a given zip seem correct. I've reached out to support on this they seem to be indicating that I might have to add every possible zip code where I might ship to. This would be crazy, and I'm trying to escalate the issue with support.
Aria here, one of the Social Care gurus at Shopify.
Since El Cajon is in San Diego County, residents of El Cajon will only have to pay the State tax if they order from you. If someone from LA County orders, they will pay the County and the State tax. If the customer is in the same city as you, they will pay all three: City Tax, County Tax and State Tax. Any District taxes are destination based in California but City and County taxes are origin based.
Taxes are complicated. At Shopify, we're not tax experts and I would always recommend you speak to an accountant or another tax expert local to you to help get your head around it. In most cases, the tax settings in your store will be correct, according to the business address you entered when you set up the store. You can certainly create tax overrides if you are advised to by your accountant.
I would strongly advise you not to charge a flat tax rate. It is likely to lose you sales when people realize they are being charged too much tax and there could be possible legal implications.
Does that make sense?
The issue is being able to collect "courtesy collection," and it is important for many vendors to be able to do this.
Unfortunately, Shopify does not support this. From support documentation:
California is a hybrid origin state. That means that any city, county, or state taxes will be based on the seller’s location, while any district taxes are applied based on the customer’s location. That said, it’s also acceptable to collect all destination taxes on an order — it is called “courtesy collection.” (Note: Shopify does not currently support this.)
Someone had a workaround in Dec 17, but it appears the tax interface he was using at that time to do it has now changed:
Perhaps the "tax override" interface provides another way to do it.
In case anyone missed it, in a stroke of coming to their senses, on April 25th, CA repealed the original ridiculousness for economic nexus for out of state sellers that went into effect April 1st. The April 1st law said you have economic nexus with $100k OR 200 transactions into CA.
The new law raised the threshold to $500k and got rid of the transaction threshold altogether. They made this retroactive to April 1st as well.
For us this means we collected sales tax for one month (as we did 1500 transactions last year into CA) that we didn't really need to. Reporting is absolutely ridiculous as you have to look up ever address and see which district the address is in, which dictates the rates. I was able to automate this mostly using CA own lookup API. I can tell you almost no sales channel collects the proper sales tax for CA.
Hi! Did you ever get any further with customer support re: this issue? I am running into the same issue and they did also tell me that I would have to setup the account as if it had physical presence in every single zip code that we ship to. The problem that we are having is that we have an ERP system that automatically calculates off of the exact rates in the zip code that we are shipping to....so our ERP system and Shopify would never match unless I took the time to setup each of these zip codes.
As I understand the new Calif rules, a Calif-based e-commerce company selling to a California buyer must use the buyer's sales tax rate. So the e-commerce seller in Los Angeles selling to a resident of El Cajon must use the El Cajon district rate. Other than setting up a "location" in each of the California city districts, is there a solution?