It appears that I can do two things:
1. Issue a partial refund by reducing the stock in the order. Things appear to be tallied correctly when you do this.
2. Go down to the Refund total on the right and enter a manual number.
The issue here is that someone forgot to use a discount code, and I want to apply the discount. However, that means they should also pay less taxes. So, for example - if the item was $100 and they should have had a 25% discount, they should have paid $75 + 5% GST, for a total of $78.75. However, they paid $105 because they didn't use the code.
To refund them the money, if I manually refund them $26.25, it appears that Shopify doesn't reduce the taxes they paid, in the tax reporting. What really should happen is I should be able to refund on the base price, and Shopify should then also add in the taxes that should be refunded along with it. The same way it does automatically already, when you reduce the number of items in an order.
Is there something I'm missing here? Or has someone worked out a way to do this properly?
This is Max from the Shopify Team.
Thanks for articulating your issue with this refund and tax problem. This is something other merchants have mentioned as a pain point for their business, currently the workaround is to keep track of orders that do not match (taxes charged to taxes required for reporting).
This is definitely not as easy as the flow could be, so, we'd love to add your feedback to our team directly, as well. If you could reply here with your shop URL, we'd be happy to link your concerns with your account for better data and follow up on our side!
So this is an acceptable solution if you do a dozen or so orders a month. If you are handling 30k+ orders a year and have to deal with this for any partial refunds it becomes completely unacceptable. Please tell me Shopify has a plan for this.
Right now the burden falls entirely on our customers because we have to cancel their order (even if shipped) and create a new order with the appropriate taxes which we then re-capture payment on.
We are a high volume / high dollar value store. Tax reporting on partial refunds (with restocking fees) is also a pain for us, as we are trying to use the Shopify finance report for our bookkeeping. Tracking this externally is not a good solution. We use a 3rd party payment processor (Paypal Payflow) and tax amounts aren't passed to them so can't be tracking in their reports either.
We would very much like to see accurate tax reports that would pass CRA / IRS scrutiny. Handling tax amounts on partial refunds is a must for this platform.
Even if Shopify has no desire to provide those reports themselves, they need to provide the tools to companies that do desire to step into the Tax game. As the Shopify API system works currently companies and integrations such as TaxJar can't accurately report taxes on partial refunds either. Please, Shopify, make this a priority.
I also would like to bump this thread/issue to highlight it's importance. I think anther big problem here is that smaller stores may not even realize that this is happening and simply issuing partial refunds and running the reports - and this is making their tax data wrong. Along with having the total Dollar Value upon which sales tax was collected (by state/tax region) displayed in the Finance > sales Tax report, this is another thing that is essential for online stores and where Shopify falls short. Now that my store is growing, this is becoming an increasing problem as more states are being added to collect sales tax from and I'm having to track them manually, and separately. Has any progress been made on fixing this? @Max
As it is not affecting their share price TSX:SHOP, it has not been prioritized. The result is an overpayment in taxes to CRA / IRS, which harms the merchant. I would really like to see movement on this issue.
Given that recently they have enabled the ability to Edit Orders, they should be able to add a field for taxes (percentage, or dollar value override) when calculating partial refunds.
CAN WE PLEASE HEAR FROM SHOPIFY ON THIS ISSUE?
This is not a blind rant, but a legitimate issue / gap in tax reporting.