Not charging taxes to everyone

Richardson1014
New Member
1 0 3

Hi, I just noticed that some of my orders are not having tax added to them. I think I've narrowed it down to customers that live in my state are being charged but customers outside of my state are not being charged? Anyone know what's going on? I've made sure all my products are checked to have tax added. 

Replies 59 (59)
Max
Shopify Staff
Shopify Staff
583 19 88

Hi, @Richardson1014

 

This is Max from the Shopify Team.


It sounds like you are working with the automatic tax rules for the United States. If you need to charge and collect taxes for all sales made, then, you would want to use some overrides and exemptions. Check out this link for some more details on how to implement those.

I'd also advise working with a local tax expert or accountant to make sure that you are charging the correct amounts for based on location (you and your customers) and the products being sold! 

Cheers,
Max

Max | Social Care @ Shopify
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gigistexas
Tourist
5 0 4

Did you get this resolved? I am having the same issue. Tax charged in Texas where I am located but bot other states.

Max
Shopify Staff
Shopify Staff
583 19 88

Hi, @gigistexas.

Max, again! I would not expect taxes to be charged to all customers in the United States if your shop is based in Texas only. For some more details on how US taxes work within Shopify, please check out this help doc

If, for some reason, you need to charge and collect taxes for more regions and countries, I'd suggest adding some overrides and exemptions to your shop by following these steps. If you need any further help implementing exemptions, let us know!

If you need some tax advice (what to charge and where), then you might find a local authority is best. Here are some options for US-based merchants;

 

I hope that helps point you in the right direction!

 

Best, 

Max

Max | Social Care @ Shopify
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allison_wilcox
Tourist
9 0 15

I'm having the same problem and will try the work around  later today.    It's uber counter intuitive.

allison_wilcox
Tourist
9 0 15

I feel really stupid as I don't see how Tax Overrides fit into this picture at all.  My store is only charging tax to Texas sales.  Which means I'm paying a TON of taxes I never collected from customers, so it needs to be fixed immediately.  Do we have to enter EVERY state and put in the Texas sales tax rates to them?

It makes no sense to me that the default is to NOT charge taxes based on the store's location.  I just don't get it.

 

gigistexas
Tourist
5 0 4
What I ended up doing is manually entering the Texas sales tax for every state. That has worked so far.
allison_wilcox
Tourist
9 0 15
Thank you so much Gigistexas!

I did some research tonight that suggests we actually don't have to charge
tax on out of state sales from texas, which brings up a separate accounting
nightmare...but...hey, one nightmare is as good as the next, right/
gigistexas
Tourist
5 0 4
With Texas being an origin state, I think we have to don’t we?
tax_pro
Excursionist
36 0 26

Hi gigistexas,  I'm a state and local tax professional specializing in multi-state sales and use taxes. The terms "origin based" and "destination based" refers to which sales tax rate will be used - origin meaning the sellers location and destination meaning the buyers location.  However in the case of origin based the sales upon which the tax rate is applicable are limited to those where the destination is in the same state. 

So assuming your location is in Houston TX (with a rate of 8.25%) then all sales that are shipped anywhere in Texas would be taxed at 8.25%.  Sales shipped to any other state should not be charged sales tax unless your business has a physical presence (also referred to as nexus) or economic nexus in that state.  If sales tax is charged on sales shipped to other states and you do not have a sales tax license in those states then the tax cannot be reported to those states and this is known as "collecting not remitting" which is a serious offense.  

If you're not registered for sales tax in any state except Texas then you don't want to have sales tax enabled in shopify for any other state.   

Hope you've found this information helpful.  

gigistexas
Tourist
5 0 4
Yes! So helpful, thank you!
Jomercito31
New Member
2 0 1
Hello, excuse my ignorance in this kind of matter but are you saying that we have to be registered to charge taxes in the state we reside/run our business (Texas) and not charge taxes to other states?
allison_wilcox
Tourist
9 0 15

Yes, that's exactly what the last poster is saying.  I was incorrectly under the impression that we had to charge tax on purchases going to states other than Texas.  Apparently we just charge sales tax for sales in Texas (as a Texas business).

Jomercito31
New Member
2 0 1
Thank you. I’m new to all this, so I guess I will have to go register to
charge taxes here in the state of Texas. ##- Please type your reply above
this line -##
allison_wilcox
Tourist
9 0 15
Yes, but only if your business is located here in Texas (we are a brick and
mortar store with an online presence).
lightning_art
Tourist
4 0 3

so do you still have to file sales taxes on items you sell out of state since you don't have to charge sales tax on them?

allison_wilcox
Tourist
9 0 15

No.  You only file state sales tax in the state you are physically located in.

lightning_art
Tourist
4 0 3

I know I only have to file taxes for the state that I live in, but what I'm asking is if I need to file taxes on items that I sold in a different state with the taxes that I file for items that I sold in my state that I live in or if I don't need to file anything on items that I sell out of state. Example. I live in Minnesota so if I sell something for $20, there is a sales tax of $1.48 that gets added on. If I sell the same item in North Dakota and it doesn't get taxed, do I still have to pay $1.48 of it towards taxes and really only make $18.52 or do I not have to pay any kind of tax on that item since it was sold to a different state.

allison_wilcox
Tourist
9 0 15
You do not pay or charge tax on the out of state items
tax_pro
Excursionist
36 0 26
You would not file/pay tax on the item sold and shipped to a customer in North Dakota. In fact you would not even include that sale on your Minnesota sales tax return (as part of gross sales)