Illinois requires that we collect taxes from everyone regardless of state

StevenFGM
Visitor
1 0 1

Our business is based in Illinois, and taxes have been setup for this state.

However, we noticed that shopify is not collecting the required taxes for customers outside of illinois.

The state of Illinois requires that we charge sales tax on ALL sales from customers that live outside of Illinois at a rate of 6.25%.

Currently it is IMPOSSIBLE to set this up.

This needs to be fixed immediately!

Replies 2 (2)

Blair
Shopify Staff
1941 258 229

Hey @StevenFGM,

 

Thank you for reaching out to the Community! I can certainly provide guidance on setting up taxes for the state of Illinois. As Illinois is an origin state with special tax rules, you will want to refer to our US Tax Reference Documentation for further insight on what this entails. 

 

Shipping specifically is not taxable if the actual cost of shipping is listed on a separate line on the invoice and there is a choice of means to get the product (i.e local pick up). You can however, choose whether you'd like to charge taxes on shipping. 

 

Illinois also follows Origin Souring rules for sales within the state and Destination Souring for out-of-state sales. The breakdown of this, can be located within our Tax Sourcing guide and outlines: 

 

  • Origin States: In an origin state, the sales tax you charge is based on your locations nexus. If you have no nexus in the state of the shipping address (i.e Illinois), then no tax is charged. If however, you do have a physical nexus in the state of the shipping address, then the location of your nexus is used to determine taxes. If you have a nexus but no physical location, then the customer's location is used to determine taxes. 
  • Destination States: In a destination state, the sales tax you charge is based on the customer's address. If you have no nexus in the state of the shipping address, then no tax is charged. If you do have a nexus in the state of the shipping address, then the customer's location is used to determine taxes. 

To set up taxes for Illinois, you will want to ensure you have registered with the tax agencies and have your Sales Tax ID. Once this has been completed, you can begin setting up your taxes by: 

 

  • Go to Settings > Taxes
  • In the Tax regions section, beside United States, click Set up.
  • In the Sales tax collection section, click Collect sales tax.
  • Select a state in which you are registered.
  • In Sales tax ID, enter your sales tax ID. If you have applied for a sales tax ID but don't yet have one, then leave this field blank. You can update it when you receive your sales tax ID.
  • Optional: If your business is located in a state where tax laws regarding shipping vary, then you can choose whether you want to charge tax on shipping.
    1. Click Advanced options.
    2. Under Shipping tax, choose whether you want to apply shipping tax.
  • Click Start collecting sales tax.
  • Optional: Add more regions and account numbers by clicking Collect sales tax.

 

For more information on setting up your taxes, you can check out our Setting Up US Taxes documentation. Please be sure to consult with your local tax authority or tax professional to verify taxes are charged correctly, and to ensure you file and remit your taxes correctly.

 

Please let me know if you have any other questions! 

Blair | Shopify 
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BlessedWill
Visitor
1 0 0

After this is setup do I have to worry about anything else or is the money automatically collected