Charging the correct amount of sales tax for economic nexus (Wayfair)

New Member
2 0 1

So, we realize this functionality is most likely on Shopify's radar, but I just need to stress the importance of tax setups for the non-Plus users and new upcoming economic nexus/wayfair case tax laws.

 

As it stands right now, the shopify economic nexus tax feature is just a hack/workaround of the physical nexus feature, where you just add any old zip code and shopify will calculate taxes. The problem is, this does NOT work in a state like CA since local/district taxes need to be charged everywhere based on economic nexus, not just inside the district of the physical nexus *which doesnt exist* with an economic nexus!

 

CA law doesn't go into effect until April 1 but ourselves as well as many other businesses have already received letters from the state asking us to collect and remit immediately. And of course this feature needs to be ready prior to 4/1 and not a day after. 

 

Chat support offered a workaround of adding every zip code to shopify as a physical nexus (lol) which in theory is not the worst idea but there's no way....

 

can an override maybe be created to charge these all local taxes? Is there something I'm missing here? I'm sure tons of sellers are running into this same issue.

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New Member
5 0 0

Hi Peter_Mendola, 

 

I feel you. Have you consider to use a compatible software solution to automate the sales tax mess? Besides issuing invoices with sales tax included and creating tax reports so you can easily fill your tax return, some of them can notify you when you have surpass the threshold of an economic nexus. 

 

Take a look at Quaderno, for instance. 

 

Hope that helps! 

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Shopify Staff
Shopify Staff
1301 26 127

Hi @Peter_Mendola,

 

Nick here from Shopify. 

 

Thanks for messaging and giving your feedback on this. I completely understand how this is annoying and can impact your business. I spoke to our team directly who works within taxes and the best way for this is what the support team mentioned regarding the ZIP codes. Shopify's information document mentions it here with the part most relevant to you screenshot below: 30-23-g0vv3-8w0xz

If you would like to elaborate on this further and how it might impact your business, please let me know and I can reach out to you directly via email or if you email us at support@shopify.com and reply with your ticket number in this thread, I can make sure the right team sees it for you. 

 

Looking forward to hearing from you. 

 

All the best, Nick

 

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Tourist
101 2 13

"If the state is a destination state, then add a physical presence that uses any zip code for the state, but you don't need to add an override. The taxes are calculated based on where the buyer is."

How do I add a physical presence that uses any zip code for the state?  When I go to shipping zones to change the ship from address, it requires the address, city, state, country, and zip code fields to be filled.  That doesn't facilitate a state-by-state with automatic zip code lookup upon checkout action.

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Shopify Staff
Shopify Staff
1301 26 127
"If the state is a destination state, then add a physical presence that uses any zip code for the state, but you don't need to add an override. The taxes are calculated based on where the buyer is."


How do I add a physical presence that uses any zip code for the state?  When I go to shipping zones to change the ship from address, it requires the address, city, state, country, and zip code fields to be filled.  That doesn't facilitate a state-by-state with automatic zip code lookup upon checkout action.


Hi @spiffystack,

 

Would you be able to elaborate a little more on what you mean, please? A destination state is when an order is being charged based on where the customer buying is based, not the seller which would be you in this case. The shipping origin address would only be your address or an address you would ship from. Would you be able to explain what you mean by "That doesn't facilitate a state-by-state with automatic zip code lookup upon checkout action."  in more detail for me? I think this is what I am not understanding 100%. 

 

In the meantime, Shopify has a helpful guide on the set up for Shipping Origins also which you might find useful.

 

Looking forward to hearing from you, Nick

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Tourist
101 2 13

What I meant is, if I'm shipping to a buyer (not me, the buyer of the product from my web store), their location is the destination state (US only).  Since there are varying sales tax cost percentages (e.g., 6% flat in Michigan, whereas California has multiple sales tax costs), how do I add a destination so at checkout the taxes are accurately calculated and displayed to the buyer in the final purchase price?

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