Please @Shopify fix this massive TAX issue! I've made a screen recording to illustrate how big of an issue this is.
https://www.loom.com/share/72b89a59c6e245d78a75444da58b95d0
Partial refunds don't adjust the sales tax to the correct amount.
I've seen posts about getting this fixed from 2018-2019 and it's not fixed. The sad thing is the majority of small merchants don't even realize that their tax summary in reports are 100% wrong if any merchant issues a partial refund (since partial refunds do not change the sales tax, it's always over-reporting). If any merchants are using the tax reporting feature in Shopify to remit this tax, they are over paying sales tax that was not collected! This should almost be a legal issue in my opinion.
I did a test where I made a draft order for $6,000 + 12% sales tax ($720 tax) total amount $6,720 and marked it as paid. I issued a partial refund for everything except 1 dollar which would be a refund of $6719 and the reporting summary for sales tax was still $720! This goes to show how skewed and useless reporting is when giving partial refunds as it shows the original sales tax amount before the partial refund took place. That's right, a 99% refund and it still shows $720 floating in the sales tax report.
In Ecommerce, it's very common for customers to forget their coupon code and reach out to the merchant to apply that coupon code to their previous purchase.
The easy fix would allow merchants to apply the coupon code to the previous order which would automatically give a partial refund. Which would give the correct refund in gross sale AND sales tax. This would also expire the coupon code for customers email address if it was a 1 time only code.
But we are not asking for anything fancy - just give us merchants the ability to edit the sales tax or to adjust correctly after partial refunds. It's so unbelievable that we can't. A simple check box like "adjust sales tax to new amount" or leave it uncheck if there was ever a need for that. Or just allow Merchants to change it manually on the line item for sales tax. Any other ecommerce platform allows for this.
Partial refunds without the ability to include the sales tax completely skew data by understating gross revenue and overstating sales tax collected.
It all adds up and the discrepancy becomes larger and larger. Another example, if a customer who is exempt for sales tax, who requests a refund of JUST that sales tax. You can't isolate the tax to be refunded. So their sales receipt is wrong and the merchants reporting is completely skewed!
These are not small issues @Shopify.
This means gross sales are underreporting as it only subtracts from the product amount where a portion of that refund had sales tax in it.
Large businesses know this and use accounting software, but this also pushes wrong data into accounting systems resulting in merchants/bookkeepers having to make a note of this each time in an extra spread sheet to revise every partial refund so that taxes are correct in their system!
For high volume merchants who constantly give partial refunds for customers who forget their coupon code (which is so common in ecommerce!). It's adds so much extra administrative burden to everyone.
Trust me, I rather not have to type out this rant, merchants have enough work to do trying to scale their business and this tax issue is unbelievable.
I greatly look forward to anyone's comments on my post and I hope this gets prioritized. Seeing how it's March 2023 and this isn't addressed yet, the future isn't looking promising in regards to getting this issue solved.
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