Hi, I have an online-only retail store (clothing), based in Texas & wondering if I need to charge taxes on shipping rates (under Taxes section in Settings - screenshot below)? In Texas, shipping is taxable, but does that mean that I, as the store owner, need to collect those taxes, or do the shipping carriers collect those taxes? Confused, please help.
First of all - your best bet is to consult with a CPA or tax attorney that is 100% familiar with your local requirements.
That said, yes you are responsible for collecting and remitting the tax, not the carriers. You are selling the 'shipping service' for your products to your customers, not the carriers.
In essence, just like any of your products, you are buying the shipping from the carriers and reselling it to your customers. Whether you are profiting from the shipping sales you are making or not is irrelevant.
In our state, we are required to tax shipping unless we offer the option for customer pick up (and it is reasonable to assume that the customer would be able to pick up the items). If TX says you must tax the shipping charges, then you must treat it just like all the other sales taxes you collect and remit.
But again - talk to a CPA or tax attorney to ensure you are compliant!