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.
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!
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.
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.
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).
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.
I said the same thing but it's true, after filing 3 years in a row and had no issue for some reason i have only collected sale tax from people who order from my site that are in my state, doesn't make sense to me and I'm starting to think it's a "Shopify" thing.
It sounds like you're comment regarding "sales over some ridiculous number like a million dollars or something..." is referring to economic nexus laws so I'd like to provide a little clarification. Please understand my intent is to help business owners become informed about various aspects of sales tax rules across the states so that they may then make informed business decisions about their sales tax obligations and responsibilities.
As you can see by the last bullet point it is possible for a business to have a registration, collection and filing requirement in a state with sales of much less than $100,000 simply because they made over 200 transactions in the state. I also recognize that the risk to the business owner for not registering may be much less than the administrative costs incurred by the business to register, collect and report a given state's sales tax. This would need to be taken into account by the business owner along with their risk for being located by a given state where they may have established economic nexus, meaning they have exceeded the small seller exception.
Hope you find this explanation helpful as well as anyone else reviewing it in the future.
I am in Missouri and this tax thing has fought me every step of the way regarding setup. I work from home and all sales are online. If I am understanding correctly, I will only charge sales tax to Missouri customers. All customers from states other than Missouri will not be charged sales tax nor will I include their sales on my Missouri Sales Tax form that I submit and pay. Am I correct in my understanding? Also - Shopify is automatically charging city sales tax, however, I do not have to collect for my city as my physical residence/business is not in the city/unincorporated land. How can I not have the city tax in there? Thanks for any insight!
Yes your understanding is correct. As far as Shopify including the city sales tax I think that is because they are using the highest rate for your zip code so I'm speculating that part of the zip code boundary is inside the city and part is outside. In order to exclude the city rate you'll need to setup a tax override for the entire state of Missouri since I'm assuming that you will be reporting all Missouri sales at the same rate correct?
If you need help setting up override start with this link - https://help.shopify.com/en/manual/taxes/tax-overrides?utm_source=gurucopy&utm_medium=link&utm_campa... - and then go down to this section - Override the taxes on a collection or on shipping charges. Lastly I suggest you initiate a test transaction from your website to confirm that the rate you want to be charged is now the rate that Shopify is applying.
In regard to whether or not you have a requirement to register and collect sales tax for another state did you happen to see my earlier comments concerning "economic nexus"? If you'd like to discuss that subject further please call me 713-858-0085. Reason is so that I can help you make an informed business decision for not registering in a state where you may have met their requirement to register under their economic nexus laws.
So...how do I set up a tax override for the state of Missouri? I need someone to explain it to me as if I am 6. I have a doctorate degree and cannot figure out how to make this durn thing calculate the shipping correctly. I put in an override for Missouri [under shipping] of 5.6%, which is the state and county tax I should collect. It is still collecting too much.
No and no. The product overrides requires manual collections and mine are automatic. The shipping override is just 5.6% for MO. I do not see boxes for city and county.
I have a question to the tax pro Jerry! I’m in WA state and will be selling online from my home. From what I gathered earlier on in this thread or another is that taxing in states outside of your origin is dependent on if your state is origin or destination based. Is that right? It seems that WA is destination based - therefore Shopify should automatically collect sales tax from my buyers dependent on their shipping address?
thank you in advance
My shop is not charging taxes. I applied for a Tax permit, entered the registration code and all the products are showing taxable. My customers are also not "non-taxable." Also, I am not receiving orders from other countries at the moment. I am not sure what else to do. The customers are coming from others states if that matters.
I live in Texas abs sold to someone in New Mexico. Shopify charged my usual Texas tax. I don’t think it should and can’t figure out how to change it.
I have set up collect sales taxes in NY state (NYC in particular so 8.875%) and the taxes are being calculated at the checkout but not collected by sShopify.
Clearly I am having to pay taxes I never collected.
I have reached out to Shopify Support however it seems impossible to get a proper answer so far?
I'm having a similar issue and understand about only charging taxes where you have a physical location (Nexus) but how to you pass on that tax to the customer as it reflects the tax, holds it back from the deposit but doesn't add to check-out. How can that be done?
I want to make sure I'm not making an error when it come to collecting taxes in IL. Shopify is only collecting taxes in the state of IL and not anywhere else. I do not have a nexus in another state, and want to make sure that I'm not going to be on the hook for out of state sales tax. Should I only be worried about sales tax in the state of IL?
Thanks for your help in advance,
My problem sounds a bit different than yours. My problem wasn't that it was only charging sales tax in MO [because that is correct for MO]. My problem was that the city tax was being added and my business is not in city limits so I am not required to collect for the city. I was trying to do an override for that issue. In your case, I think it may be working correctly as in many states you do not have to collect [or pay] sales tax for online transactions for other states. You will need to make sure your states is one of those states.
So my issue is I have printful integrated with shopify. Shopify only charges tax to customers in my state (Oklahoma) but not outside my state. But printful charges me tax on each order. So for orders outside my state where the clients are not paying tax, it is going out of my profit. am i just supposed to eat the taxes for all my out of state orders? thats a big chunk of my margins.
I don't get it either. My business license is in WV and my store is only adding tax for customers in WV nowhere else!! That means I have to pay for their tax? I am so confused. I have done every override. I can't add in every state there isn't even an option for it. Did you figure out a solution, no one can help me?
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