Hi, I just noticed that some of my orders are not having tax added to them. I think I've narrowed it down to customers that live in my state are being charged but customers outside of my state are not being charged? Anyone know what's going on? I've made sure all my products are checked to have tax added.
This is Max from the Shopify Team.
It sounds like you are working with the automatic tax rules for the United States. If you need to charge and collect taxes for all sales made, then, you would want to use some overrides and exemptions. Check out this link for some more details on how to implement those.
I'd also advise working with a local tax expert or accountant to make sure that you are charging the correct amounts for based on location (you and your customers) and the products being sold!
Max, again! I would not expect taxes to be charged to all customers in the United States if your shop is based in Texas only. For some more details on how US taxes work within Shopify, please check out this help doc.
If, for some reason, you need to charge and collect taxes for more regions and countries, I'd suggest adding some overrides and exemptions to your shop by following these steps. If you need any further help implementing exemptions, let us know!
If you need some tax advice (what to charge and where), then you might find a local authority is best. Here are some options for US-based merchants;
I hope that helps point you in the right direction!
I feel really stupid as I don't see how Tax Overrides fit into this picture at all. My store is only charging tax to Texas sales. Which means I'm paying a TON of taxes I never collected from customers, so it needs to be fixed immediately. Do we have to enter EVERY state and put in the Texas sales tax rates to them?
It makes no sense to me that the default is to NOT charge taxes based on the store's location. I just don't get it.
Hi gigistexas, I'm a state and local tax professional specializing in multi-state sales and use taxes. The terms "origin based" and "destination based" refers to which sales tax rate will be used - origin meaning the sellers location and destination meaning the buyers location. However in the case of origin based the sales upon which the tax rate is applicable are limited to those where the destination is in the same state.
So assuming your location is in Houston TX (with a rate of 8.25%) then all sales that are shipped anywhere in Texas would be taxed at 8.25%. Sales shipped to any other state should not be charged sales tax unless your business has a physical presence (also referred to as nexus) or economic nexus in that state. If sales tax is charged on sales shipped to other states and you do not have a sales tax license in those states then the tax cannot be reported to those states and this is known as "collecting not remitting" which is a serious offense.
If you're not registered for sales tax in any state except Texas then you don't want to have sales tax enabled in shopify for any other state.
Hope you've found this information helpful.