How does charging taxes work?

[majestics]

I had my website set so that each product sold would have tax charges.. but I seemed to be getting none of that (tax charge money) after a sale.. (only shipping and product price.) My question is did I do something wrong or does Shopify handle paying taxes for you and that's why I was receiving no money? Im new to this sorry, and thank you! :)

[eCommAccountant]

Shopify only calculates the tax and collects on your behalf during the sale process, it's your responsibility to file and pay.

In your Shopify settings you have to turn on the sales tax collection feature for each of your known sales tax nexus liabilities.

[SamanthaK]

What if we do not have nexus in a state that we are shipping an item to? 

[eCommAccountant]

Each state has thresholds that must be met, once you've reached these, then you'll have to collect sales tax.

[SamanthaK]

Thank you for your response. 

If I was to purchase the item from a manufacturer using an exemption certificate, wouldn't tax be due somewhere by someone in instances like that where nexus has not been met. 

[eCommAccountant]

Yes when the item is sold to the final buyer sales tax is usually due, if thresholds have been met in the state.

[Kevin5801]

@eCommAccountant 
KS is the exception
Threshold: There is no exception for small sellers, so all remote sellers with sales in Kansas will meet economic nexus. *


*at last check

[eCommAccountant]

This all depends on who you talk to in Kansas. If you speak with their attorney Mark Cairdullo who heads the Kansas Dept of Revenue, your statement is correct. If you speak with Niomi or Loren in the Consumer Protection section of the Kansas Attorney Generals office, your statement is NOT correct.  Choose your poison...

https://fox4kc.com/2019/09/30/kansas-attorney-general-says-new-policy-for-taxing-online-sales-is-inv...

[Kevin5801]

Plus there's the validity of having an economic nexus if sales are under $100k - SCOTUS ruled on a case stating 100k+, so values less then 100k could be still be challenged unless US Congress decides to actually get some work done and define it.. 

I guess it's "safer" to assume $0 nexus and pay them their $17.50/yr in collected tax, especially since sites like TaxJar are around to take the brunt of the work for you... ;)

[jasonavada]

Hello there,

As an online merchant, you might have to charge taxes on your products, then report and submit them to the government. Despite complex and changeable laws and regulations, you can set up on Shopify to help you handle the most common tax calculations automatically. Also, you can install tax overrides to deal with some unique tax laws as well as situations.

I found this article about how to charge taxes on Shopify, hope you can find the right answer after reading it ;-)