Not want to charge Sales Tax to B2B customers with Resale Certificate on file

[PrioRim]

Hello community,

our shop is mainly for B2C customers.

However I would also love to handle our B2B clients over our store and enable them to put their orders in right here as well.

However for many of those we would get a Resale Certificate from them which means we would NOT need to charge them sales tax as they are resellers.

Is there a way to set the store in a way that we charge standard sales tax to B2C clients but not to B2B clients?

Thank you so much for any feedback!

[Victor]

Hi @PrioRim,

Thank you for getting in touch. You should be able to do this by making your B2B customers exempt from tax in the Customers section of the Shopify admin. When you create a customer account, you'll see a "Collect tax" option which you can leave unchecked:

Once the profile has been created, your customer will just need to log into this account when making a purchase and they should not be charged tax at checkout. I would recommend creating a page on your store re: wholesale and B2B orders, and encouraging potential customers to contact you directly so you can create a tax-exempt customer profile for them.

Alternatively, there are also a wide variety of wholesale apps that can help make your store suitable for both B2C and B2B customers. You can check out the different ones on offer and see what sort of features are offered and whether they'd be suitable for you and your business.

[SolventDirectGB]

The B2B company profiles Tax Exemption feature doesn't work and I confirmed with a Shopify Plus support staff. The only way to have tax exemption at the moment is using the standard customer accounts and tax exempt option. 

[Jonathan-ES]

Looking for this feature as well. Has B2B team provided any updates?

[ftballguy45]

I concur that this does not work for B2B customers. We have tax exemptions set up for B2B companies, customer logins assigned to locations for the companies, and when they checkout they are being charged tax. Shopify can you investigate and fix this?

[Osama-Folio3]

This is way too ridiculous. It's 2024 now and this issue still persists. We were almost on the go-live phase on our Plus account and it turns out the tax exemptions are not working for B2B customers. The support guy is still giving the same lame excuse to use PERSONAL ORDERS instead of B2B orders which is a joke in it's own self.

This thread is already 2 years old and no fix so far. What's the point of giving the option to not collect tax and even tax exemption on company locations when it won't freaking work. 

This being said, has anyone been able to find a workaround or any app for this? This is very essential for our business logic as we want some of our B2B customers to be tax exempt.

[SGUSAMIKE]

Did you have a chance to review the B2B location instructions for Avalara further down in the comments thread? 

If the customer isn't associated with a B2B Company Profile in Shopify, you add their Shopify customer ID to the Customer Code field in Avalara.

If the customer is associated with a B2B Company Profile, add the company location ID to Avalara with the "b2B:" prefix. If a B2B Company in Shopify has multiple locations, you need to create a unique entry in Avalara for each location.

Example: b2b:6582545824 is entered into the Customer Code field in Avalara.

[Osama-Folio3]

Thanks for the direction. However, we are not using Avalara. We are on basic Shopify tax system. 😞

[Osama-Folio3]

@SGUSAMIKE were you able to make this work using Avalara? Please suggest? As SHOPIFY docs say Avalara does not support tax exemptions on this link: https://help.shopify.com/en/manual/taxes/tax-services/activate#considerations-for-using-avalara

[SGUSAMIKE]

Yes. We can support tax exemptions using Avalara. However, there were plenty of pain points setting this up. NO documentation from Shopify or Avalara informs you about the "b2b:" prefix requirement or the necessity to add the B2B location ID instead of the customer's ID. It took several hours and multiple sessions of customer service requests between Shopify and Avalara support to figure this out.

I'm still not a fan of Avalara because their prices are high, and you must pay an extra "connection fee" to integrate Shopify Plus with Avalara. But, to be fair, collecting sales tax from dozens of states is a major pain point.

[BassFishinElect]

Has this been resolved? One of the reasons we just upgraded to Shopify Plus was the B2B functionality. I have companies trying to complete transactions and it’s charging them tax. I know we can set the tax at the customer level but that defeats the purpose of the B2B functionality. I can’t imagine this was overlooked??

[SGUSAMIKE]

It appears this issue still needs to be fixed. We use Avatax to calculate sales tax. However, B2B tax-exempt accounts are broken, and sales tax is always charged. Plus, there is no documentation related to Shopify Plus B2B and Avatax.

The only workaround I'm aware of is deleting the B2B account and using the personal account to avoid your customer being charged sales tax.

I'm all ears if anyone has found another workaround or fix for this issue.

[BassFishinElect]

We were able to resolve this by switching from Manual Tax to Basic Tax in Shopify. We use Avalara in conjunction with Basic Tax and everything is working as expected now for our B2B customers. Make sure you add the Companies Tax ID and the state its associated with in the tax exemption settings. 

[SGUSAMIKE]

Thank you. It appears Shopify fixed our issue, and AvaTax is working as intended.

[BAMM921]

We're running into this exact issue right now. Are you saying that even though you have updated the B2B customer's "Customer Code" in Avalara with their Company Location ID, you still need to add the company Tax ID and State on their Company profile under the "Manage tax exemptions" field? Thanks

[SGUSAMIKE]

If the customer isn't associated with a B2B Company Profile in Shopify, you add their Shopify customer ID to the Customer Code field in Avalara.

If the customer is associated with a B2B Company Profile, add the company location ID to Avalara with the "b2B:" prefix. If a B2B Company in Shopify has multiple locations, you need to create a unique entry in Avalara for each location.

Example: b2b:6582545824 is entered into the Customer Code field in Avalara.

[bruceeeee]

Appreciate all of your insight here @SGUSAMIKE. As mentioned, if you use Avalara you need to add the b2b: prefix before the location ID. Just adding for context here in case anyone has this issue in the future - we have one specific customer account that was having an issue which we were only troubleshooting on that account. Make sure when doing testing you test on numerous accounts - we are now resetting that one problematic account back up.

[noob7as7ic]

I still can't get this to work, and the steps below are what I've tried.

1. Create a customer in Avalara using b2b:XXXXXX as their customer code, and upload their resale cert (we use Avalara for taxes in NetSuite too, so this account is set up exactly like their NS account but with the updated Customer Code, and their NS customer does not get charged tax)
2. Created a customer in Shopify
   1. Tried with the Collect Tax checkbox both checked and unchecked
3. Create a company in Shopify with the above customer attached
4. Added their only location to the company
   1. Added their tax ID and marked the state they should have tax exemptions
   2. Added the b2b:XXXXXX as this location ID 
5. Created test orders and all had tax calculated and applied

Am I missing something here?

[SGUSAMIKE]

I'm unsure why it's not working without seeing your exact process and circumstances. Do you have the Shopify "Avalara AvaTax" app installed in your store?

[noob7as7ic]

Yeah, I cannot figure it out either, so I will give it until tomorrow to see if it takes time to propagate.

As for Avalara being installed, it is installed and is showing live.

[SGUSAMIKE]

Ensure the Avalara "Customer code" is the Shopify Companies Location ID with the B2B prefix. The email address listed in Avalara has to match the customer's Shopify account.

I find the process works better if the customer and company are created in Shopify first.

[noob7as7ic]

I created a second company/customer with everything matching and had the same thing happen. Not sure what's going on so I'll give it until tomorrow and check again. If we still have issues I guess I'll have to reach out to Avalara support.

[SGUSAMIKE]

Good luck. Once you get it dialed in, it works well.

[edcava]

I have been having this issue for a long time and I cant get it to work. Oddly enough, some orders are not charged taxes where others are. I am on Shopify Plus and AvaTax. My resellers dropship, so they have a certificate for, say, Maryland, but they ship to all states. Do I need to add a certificate to every single state? Why isnt AvaTax just taking the tax exemptions from Shipify and dont charge taxes? This has been such a pain. Any help would be appreciated.

[SGUSAMIKE]

Yes. You must add a certificate to your customer's Avalara record for every state they ship to. It's a major pain, but there is no workaround. Depending on the state, certain items may be exempt from sales tax, which is probably why your sales tax calculations are inconsistent.

[noob7as7ic]

I did some more testing this morning and noticed that the B2B transactions are not showing up in Avalara when saved, but our B2C transactions are. This makes me think there's an issue with our connector. 

I've reached out to support to get their thoughts. I initially thought we might need another connector listed in Avalara under the integrations tab, but their intro video says you can use an existing integration.

[noob7as7ic]

Well, I am getting closer.

I placed another test order this morning after deleting and reinstalling the app. The order itself was charged tax and there was no record of the order in Avalara. Once I fulfilled and invoiced the entire order, I processed a refund and I see the refund in Avalara, so they are connected.

Now to figure out why the sales orders are not talking to Avalara. 😕

[SGUSAMIKE]

Brutal. I'm sorry you're experiencing these issues with sales tax calculations. The order of operations is important. I suggest creating the customer's Avalara entry before creating a sales/draft order in Shopify. Reversing this order usually results in the tax-exempt status failing.

If you're already following this process, my only suggestion is to continue working with Shopify Support.

[noob7as7ic]

Well, I decided to try your suggestion about creating the tax-exempt customers in Avalara before creating them in Shopify, and that seemed to have fixed it. I placed a few test orders with no tax, and I see them in our Avalara dashboard. What a nightmare of a process. 

Thanks for all your help!

[SGUSAMIKE]

I'm glad my suggestion helped! You're correct that the Avalara/Shopify integration is a nightmare. The lack of accurate documentation is what causes all these headaches. At least we have the user forums to fall back on!

I wish you the best of luck with your store. Take care.

[noob7as7ic]

It also looks like there's no need to add the b2b: prefix either. I created another customer using the existing tax-exempt customer in Avalara that was populated from NetSuite, and the new order didn't charge tax.

This will at least keep us from having to duplicate all certs in Avalara.

[benknox]

Hi All, this is hard to find but the setting does exist in B2B. Tax exemption follows the company location, not the company nor the customer. 

Navigate to "Company" then click on the location you wish to edit exempt status. Scroll down at right to "Customizations".  Click the three dots and "Manage Tax Exemptions". 

[sylviac]

We tried this, despite it clearly stating Status Exempt is possible,  it still charges the 5% federal tax component on our B2B customers/companies within Shopify Plus.  After multiple lengthy discussions with Plus support, they said it's set up this way for their tax compliance responsibilities (?) and that changing federal tax to 0% is not possible/compatible with Shopify Plus for B2B yet and they relayed my feedback to their developers.  Very frustrating and a lot of extra work for us, not to mention paying service fees on the transactions if these affected B2B customers have to pay the taxes upfront and then we turn around and manually refund those taxes.  

It seems Avalara changed their business model at the end of May 2024 and app subscriptions through Shopify App store are not offered anymore so not easy to trial and set up, it requires a full on separate contract and integration.

[benknox]

Hi Sylviac, you must be in a different region or country. I am commenting from the US where this must be slightly different. We do not have federal sales tax, which may be a signal that the settings are different for your location.

[AidanG]

Hi,

There are now 3 tax options to choose from at the individual company/customer level

• Collect tax
• Don't collect tax
• Collect tax unless exemptions apply

The preferred option can be assigned when creating a new company/customer and existing company/customer preferences can also be adjusted.

[Curzey_A]

Hello @AidanG 

I just noticed this by "mistake" in the admin, and tried to search of this in the changelogs to see when it was announced, as this is something we have been waiting for. 

It also seems to be only available since the 2025-01 api version. 

Can you link me the changelog for this feature?

[AidanG]

Hi @Curzey_A 

You can find the changelog here

[Curzey_A]

This does not mention the "unless exemptions apply" option though. But thanks 🙏