How do I set up sales tax collection only in Pennsylvania for my sports apparel store?

[EA2]

Hello Shopify Community! Currently setting up a Shopify store (sports apparel) and not yet live and still in the development stage then the address of the store is within Pennsylvania. The question is how can we make it so it's only collecting tax in Pennsylvania?

Do we have to mark our products as apparel since Pennsylvania doesn't charge tax for clothing? Your feedback or answer is highly appreciated. Thank you in advance! 😃

[KP_Enterprises]

If you only sell apparel and only sell in PA and PA doesn't have sales tax on apparel, why would you want to turn sales tax collection on?

[Greta]

Hi there, @EA2!

I'm happy to help.

According to our US Taxes Reference, Pennsylvania is an Origin state, so the sales tax you charge is based on your location's nexus. This means that if you have no nexus in the state of the shipping address, then no tax is charged. This is done automatically, so as long as you've set up your sales tax collection in Pennsylvania, no taxes will be charged outside of Pennsylvania.

If you don't have to charge taxes on clothing, you will need to set up a tax override, as this is not done automatically by out system. You can review the steps on how to do this in our help document!

Please let me know if you have any more questions about this and I'd be happy to help you out further.

[kellybowden]

Hello, can I ask a question that sort of branches off this?

I am located in Arizona so I have Arizona tax turned on.  However, I am dropshipping, so my items are sent from other locations.  If one of my items is shipped from California, do I need to turn on California?  And additionally, if I have a customer who is shopping from Montana, do I also need to turn Montana on?  Or is that not necessary?  

Thanks in advance for your help. 

[KP_Enterprises]

Typically you only turn on for the shipping destination. If you sell into another state, you may be liable for sales tax in that state and that is determined by physical or economic nexus. Some states, like Montana, do not have sales tax but you'll need to do your homework to find out which. Search economic nexus and you'll find considerable info. Economic nexus is determined by sales volume or the number of transactions that you have in a state in a certain time period. You'll find those thresholds when you search for economic nexus.

[Greta]

Hi, @kellybowden!

Thank you for your comment. @KP_Enterprises provided some great insight. I'm unable to provide tax advice and won't be able to tell you where to charge tax based on your situation. I did, however, find these guides that may be helpful:

• Dropshipping and Sales Tax: who collects, who pays? - Quaderno
• Drop Shipping and Sales Tax: A Simple Guide | Bench Accounting

From that last guide, this line will likely point you in the right direction: In the U.S., all sellers (whether retailers or drop shippers) are required to collect sales tax if they have sales tax nexus in the state to which the item ships. If you'd like to read more about nexus, you can check out our help document here! If you still have questions about your tax liability, your best bet will be to contact your local tax authority or tax expert.

Please let me know if you have any more questions, and thank you again for your post!