Financing, tax rates, and accounting
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Hi, have you checked on your setting taxes if you have any state override? or your tax regions have been set up properly?
If you want we could have a deeper look for you. Just write us at info@webmefy.com and we would love to help you.
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Hi @ResoluteCBD,
Thank you for getting in touch. Generally, the Shopify tax system will only charge sales tax to US customers in states where you have a presence that is inputted into Shopify's tax settings. I would presume that your store's address is based in Colorado, meaning that the system recognizes that you have a tax nexus here and is charging Colorado-based customers accordingly.
If you do not have a tax nexus in a state, you likely won't need to collect and pay sales taxes for orders placed from that state. A nexus is usually defined by having employees or locations in a state; we've more information on how this is defined here. We also offer a more comprehensive explanation of setting up US taxes on Shopify that you may wish to check out.
Do you have other locations or employees working in other states, or are you and your business only based out of Colorado?
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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This is an accepted solution.
Hi, have you checked on your setting taxes if you have any state override? or your tax regions have been set up properly?
If you want we could have a deeper look for you. Just write us at info@webmefy.com and we would love to help you.
These guys are fantastic! Use them for any Shopify questions.
This is an accepted solution.
Hi @ResoluteCBD,
Thank you for getting in touch. Generally, the Shopify tax system will only charge sales tax to US customers in states where you have a presence that is inputted into Shopify's tax settings. I would presume that your store's address is based in Colorado, meaning that the system recognizes that you have a tax nexus here and is charging Colorado-based customers accordingly.
If you do not have a tax nexus in a state, you likely won't need to collect and pay sales taxes for orders placed from that state. A nexus is usually defined by having employees or locations in a state; we've more information on how this is defined here. We also offer a more comprehensive explanation of setting up US taxes on Shopify that you may wish to check out.
Do you have other locations or employees working in other states, or are you and your business only based out of Colorado?
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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Thank you for all your help, I would suggest that anyone who needs Shopify help contact these guys! so helpful and prompt
Would like some additional help here.
We have an Economic Nexus in 46 States. Only 12 of which require us to collect State, County and Local. The other 34 States we only need collect the State Tax.
I've scoured the forums looking for a solution to this and I cannot locate one. The Tax Override settings don't work for anything but a specific zip code.
Surely Shopify doesn't expect us to enter all of the Zip Code in every State to calculate an override. There are 39,917 zip codes in the USA.
Does anyone have any suggestions.
Resolute -
I've entered one zip code per State and have all 46 set up. But, for example, for New York we should only be charging the State Tax - not the County and Local. I've entered a Tax Override for New York, but the override is not applying Statewide - it is only applying to the locality for the zip code I used.
Thoughts?
Hi @R_Reno,
Thank you for reaching out with your question. As @ResoluteCBD said, adding a ZIP code from the state in question should configure the taxes correctly. In terms of the New York issue you mentioned, do you have the "Applies to all counties and cities" option enabled for the override? I believe if you have this enabled it should apply this override on a state-wide basis.
Here's a screenshot of an example from my test store:
Please let know if it's still not working as desired once this option is enabled.
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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Thanks for getting back to me. This is such a perplexing set up. Yes, and when the box is checked for "Applies to all counties and cities", the tax rate is overridden and charged flat across all State, County and Local taxes.
Another thread that I read through suggested I check both the County and City Level. This change nets the same result:
From what I'm reading, this is a major issue for everyone who doesn't have the Plus level and has multiple Economic Nexus requirements.
Hi @R_Reno,
Okay, I see. To clarify, do you want all orders from New York to have the 4% state tax applied, but no county/ city taxes alongside it? And this would apply to orders from anywhere in New York state?
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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Yes, as an Economic Nexus State where Destination-based Sales tax is collected, we need only collect State Tax.
Yes, 4% NY State Tax and no County/Local Tax for all orders in NY.
Hi @R_Reno,
Thank you for clarifying that. I have just tested this on my own store and it seems to be working correctly—you can see here at checkout, only the 4% state-level tax rate as been applied:
I can check this is the backend too, in the Orders section. Both the county and municipal taxes were not charged:
This is how I have the override set up in the backend:
Have you received real orders from New York-based customers since this override has been applied, and they've been charged too much tax? Or have you just been testing this? Also, if you'd be happy to share your store's URL here I would be happy to test this myself on the frontend of your store.
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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Yes, we have overcharged several dozen customers before it was caught. Please note the screenshots earlier in the thread - it is still charging all three levels.
We have 5 different Shopify Sites, but you are welcome to check it out on https://epure7cbd-com.myshopify.com/.
For now, I have NY set up as discussed. I appreciate your help.
Hi @R_Reno,
Okay, thank you. I just went to your site, added a product to my cart and proceeded to checkout. When I proceeded there, the 4% tax rate is all that is being charged:
$2.36 is 4% of $59 so it doesn't seem like any other taxes other that the 4% New York state tax is being applied.
Have you tried this yourself? Are you seeing the other tax rates show?
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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Just did. Went to the site to place an order as a customer. Also set up a draft order - both with the same result. I'm not sure why we are getting different results.
Live Cart:
Draft Order:
Hi @R_Reno,
Okay, thank you for sharing that. I'll need to take a closer look at this and to do that you will need to be authenticated on the account. As such, it's best that we continue this discussion over email. I will send an email to the email address tied to your forums profile—please look out for that and reply to me there.
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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Hi @ResoluteCBD,
That's good to hear! How did you manage to get the taxes charging as desired?
Kind regards,
Victor | Shopify Social Care
Victor | Social Care @ Shopify
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Hi R_Reno,
I'm a state and local tax professional specializing in multi-state sales and use tax and found your comment - "Only 12 of which require us to collect State, County and Local. The other 34 States we only need collect the State tax" - to be very interesting. Reason is because I'm only aware of a few states that offer a single rate for remote sellers to charge and exclude them from collecting their local sales tax rates. As an example I do not know of any provision in New York's sales tax rules that allow a remote seller to only collect the state tax and exclude them from collecting their local taxes.
With that said I'd be happy to review your information source to verify its accuracy if you'd like to email it to me at jerry.shopify@tsttllc.com.
Regards,
Thanks @tax_pro . My issue has been resolved and I had incorrect information as it relates to New York specifically.
Hi @tax_pro ,
I had a question about sales tax. I have read that out of state sales tax has changed a lot since 2021 and that there is something called “use tax” for out of state delivery destinations so that they will be able to get their sales tax even if you don’t have nexus there. Can you explain this? Does this apply to small shops selling art and crystals that ship to all states?
Thank you,
Sarah
What if my business is legally based and run out of FL but my 3rd party fulfillment center is in CO? Where do I collect tax?
Thanks!
Sir. I’m in Texas and have sales tax enabled. When I make sales like Florida or Tennessee just for example I’m not seeing sales tax included in amount. I’m in Texas and collect .0825%. Why won’t it work? What do I have to do to get all US to pay sales tax when they purchase?
Hi @Jvskebos1,
Thank you for getting in touch. If you and your business are based solely in Texas, then you likely will only have to charge sales taxes in the state of Texas for now.
You generally do not need to register for sales tax in a state unless you have a tax nexus there, which can be based on physical or economic factors. Having a physical nexus in a state would typically be something such as you having a warehouse, an office, or employees in the state, while an economic nexus would be based on the number of sales and/ or the amount of revenue made to customers within the state over a certain period of time.
This means if you do not have any physical presence in states such as Florida or Tennessee, or meet the economic criteria for either state, then you likely will not need to register for VAT in those states and as such customers in those states will not need to pay sales taxes on their orders.
You can use our US taxes reference to learn more about thresholds for tax registration in each state. For example, in Florida and Tennessee, you would be required to register for sales taxes in each state if your revenue from sales to customers in either state was equal to 100,000 USD or greater over a twelve-month rolling period.
I hope this makes sense, but please let me know if you have more questions.
Victor | Social Care @ Shopify
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Thank you. This is super helpful. I'm also in Texas. So just to be clear, since I live in Texas and our office is in Texas then we have to charge sales tax for any customers shipping to texas, right? How much? .0825%?
We have an employee that lives in Georgia and one that lives in Massachusetts. Do we have to charge sales tax there as well?
Really appreciate your help.
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