I have a online store selling clothing and have a warehouse in Minnesota. I know Minnesota don't tax on clothing. However, I've noticed that my store ONLY tax customers who are based in MN but no one else. And I'm confused :( why is it doing that? Did I do something wrong on my setting? Or this is one of the tax law that I could not understand?
I’m Helen from Shopify Support, and I’m happy to help clarify this for you.
Are your taxes set up to collect automatically on your store? If so, Shopify's default tax settings for the USA, are determined by where you have nexus, as well as whether your state is an origin or destination based state.
From what you are describing, it sounds like you only have nexus set in Minnesota, meaning your business has a physical presence there (ie. your store address and your warehouse). Therefore, the default tax settings would only collect taxes from customers within that same state. Please take a look at our Help Doc on US tax nexus for more information about this.
If you are required to collect taxes in other states that you do not have nexus in, you can manually set up your tax rates by following our Help Doc here. That being said, I highly encourage you to reach out to a tax professional to clarify what the specific tax requirements are for your business, so that you can set them up accordingly.
All the best,