Nick here from Shopify. ?
Great question as taxes can be difficult even on the best of days.
One thing we always suggest regarding anything to do with taxes is to consult with your local tax office or an accountant. Tax law is something we are not experts in, and consulting with an expert in the field is definitely your best bet. We can help you with adding in a tax exemption within Shopify though. The way to do this is to create a product or collection to be tax exempt for the tax-exempt customers. Shopify has a helpful guide going through all the steps on how to do this here.
Hope this helps guides you on the best steps to take here.
All the best,
Many jurisdiction require merchants to have a form on file - somewhere - when a customer claims a tax exemption. So you need to allow people to upload the form, or mail it to you, or something. This would only be checked in the event of an audit/lawsuit, which is extremely unlikely from an out-of-state sales tax agency, for a small merchant.
“Nobody is talking about enforcement mechanisms, or even thinking about that,” said Verenda Smith, deputy director with the Federation of Tax Administrators. “Everybody is still in the stage of having elected officials work out what they want as a tax policy, generally getting their laws and guidance in place.” 6/19/2019.
The reality is that sales tax is a giant evolving pain in the butt in the US right now. see https://community.shopify.com/c/Accounting-Taxes/The-mess-around-US-out-of-state-sales-tax-aka-WARNI...
So what you are talking about it likely to be just fine, as long as you don't use a program which participates in the Streamlined Sales Tax (SST) program. They generally require you to upload a form for every exempt customer.
It would be SUPER helpful if there was at least a line on the finance report that told us the amount of sales that were tax exempt. This is something that we have to report with our gross sales each month/quarter in many states. It is the most lacking feature from reports and one of the most important from anyone who sells to exempt customers. PLEASE, PLEASE, PLEASE add this to the reports!!!
how in the world do i send in my tax exemption form (ST-4) i have been looking all day and cnt find out how to send it to them. the bad part is that they sent me an email back about my business certificate being the wrong one, so i need to send the st-4 form instead which i have and ther is no link or way i can find to send it to them? should i just email it or something if so who do i email the doctument to???
Without getting into state specific details and exceptions, for most states you'll want to collect the state specific applicable tax exemption document itself. Simply having only the tax number is a recipe for disaster when your company is audited.
If you or anyone else is looking for a solution provider that can help streamline exemption certificate management collection in your Shopify store, we would recommend to checkout out EXEMPTAX. We can provide more feedback as to the various integration solutions available to streamline the collection process that are more streamlined (both from a risk and effort perspective) than simply providing an upload button during checkout.