Tennessee Tiered Tax

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Shopify Partner
131 6 14

We are looking to potentially implement Shopify POS, and have a new site opening in Nashville, TN. Apparently they have a state tiered tax structure --> https://help.avalara.com/Frequently_Asked_Questions/Miscellaneous/How_is_the_Tennessee_Tiered_Tax_ap...

 

Long story short is single line items purchased between $1,600 and $3,200 are taxed at a different rate. Is this something natively handled in Shopify POS? Or does it take plugging in a third party app such as Avalara?

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Shopify Partner
131 6 14

Trying this out in a Shopify POS location of Nashville, TN I rang a sale. Single item for $4,000. Which according to the tax laws should've come in at $360 total tax. Yet Shopify POS came in at $370 total tax. The test customer would've overpaid $10 in sales tax. Screen shot below, along with a quote based on the same scenario from Avalara's website.

 

Tennessee Tiered Taxing Example:

  • State tax rate of 7% is applicable to all amounts.
  • Local tax rate between 2.25%  and 2.75% is applicable between 0- $1,600 for all items.
  • State single article tax rate of 2.75% is applicable for all single items between $1,600-$3,200.
    • Example: Single item sold for $4000 to Nashville
      • State tax: $4000 * .07 = 280
      • Local tax: $1600 * .0225 = 36
      • Single Article tax: $1600 * .0275 = 44
      • Total tax: $360

 

tax.jpg

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Shopify Partner
131 6 14

Can anyone from Shopify please speak to this? We were told that if we upgrade to Shopify Plus then we can plug into Avalara. And this in turn will automatically pull in correct sales taxes. Regardless of the recipient location, fulfillment location, etc. I can understand how this will work in Shopify e-com. But will this also work the same way in Shopify POS? Since I have confirmed that Shopify POS out of the box doesn't correctly calculate Tennessee tiered sales taxes.

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Shopify Partner
131 6 14

skeleton.jpg

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Success.

Shopify Partner
131 6 14

Apparently the only true solution is to upgrade to Shopify Plus, thereby being able to use the Avalara sales tax app. This should automate correct tax calculation to feed into Shopify e-com/POS. And will also automate state tax reporting. It's a shame that out of the box Shopify e-com/POS doesn't correctly calculate sales tax. 

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