Shopify / Avalara hookup not working properly on some orders (resulting in no sales tax collected)

[dekalb]

Heads up to Shopify Plus merchants that there might be something wrong with the Avalara (AvaTax) integration (potentially starting around October/November 2022).

The integration is supposed to calculate sales taxes on each order during checkout and charge that user the calculated amount. However, we discovered that on some orders, it isn't working properly, and Shopify is charging the customer $0 of sales tax, even though it is a taxable order in a taxable state (and for other orders on the same day in that same state with those same items, sales tax was properly charged).

We're still unsure exactly what's going on with these orders and if there is a pattern (it seems to generally be more common in orders where the customer uses Shop Pay, and it seems to have started in October 2022, but neither of these is 100%). We've been in touch with Shopify support on it, and they admit there is an issue, but say that it's Avalara's fault because Shopify is pinging Avalara for the tax calculation and Avalara is inaccurately feeding back $0 at the time of the calculation.

We're now waiting on Avalara support to look into it to see if they can figure out what's going on and resolve the issue. But it's very costly since Avalara is still remitting these taxes to these states on our behalf, and it's just coming out of our pocket since we didn't collect anything from these customers.

So, just putting this out there as a heads up for any other Shopify Plus / AvaTax merchants to look at a report comparing the sales tax Shopify actually collected on each order vs. the sales tax Avalara says you should have collected on each order, so that you can identify if you might also be having this problem of mismatches (where Avalara says the tax should be $X, but Shopify collected $0).

I'd be very curious if others are experiencing this too, and I'll add an update here if / when we hopefully get to a resolution.

[Karat_144]

We are having the same issue. Shopify gave us the same answer, and Avalara was trying run a detail audit. However, it was random so it's hard for them to find the orders with that issue. Please let us know if you do find a solution. I will do so as well. Thank you!

[dekalb]

What it seems like was happening here is that, for most orders, when a user is going through checkout, Shopify assigns a numerical customer ID to that user (even if they don't have an account or purchase with you yet), and when sales tax needs to be calculated, Shopify pings Avalara for the tax calculation and includes that customer ID. However, in certain cases, Shopify hasn't assigned a customer ID by the time it pings Avalara for the tax calculation, and so the customer ID it communicates to Avalara is "temporary" (it's still unclear what the exact circumstances are that prevent Shopify from assigning a numerical customer ID, but it seems to happen more frequently when customers use the Shop Pay accelerated payment method).

It just so happened that, in Avalara, we had an exemption setting for transactions with a missing / "temporary" customer ID. So every time Shopify would ping Avalara for the tax calculation on an order with customer ID "temporary", Avalara would return $0. 

Shopify has been unable to fix or change the issue of sending a "temporary" customer ID to Avalara, but we've adjusted our exemption settings, and believe that's solved the problem (though we're still running some tests to fully validate that). 

[Karat_144]

Hello Dekalb,

Thank you for the explanation. Please do let me know if the adjustments work. It has been a pain since it is random.

[robcmadden]

Hi Dekalb!  I just ran into this issue and can also trace it back to Oct 2022 (which is also the month in which we activated Shop Pay at checkout) .  Did you ever get to the bottom of it?  Do you remember which states/provinces/countries were mostly impacted?

For us it seems to be primarily affecting tax calculations to Canadian provinces (shipping from OR, USA) where the subtotal of an order is less than $40 USD.  Given that Canada's import deminimis is $40 CAD and Avalara is correctly calculating the tax on it's end for all orders with a subtotal >$29 USD (but failing to transmit them back to Shopify), my guess is that there is some conflation between $40 USD and $40 CAD in the code that should push the tax back to Shopify.

[dekalb]

Sorry you're having this issue. We never were able to get to the bottom of why Shopify was passing a blank / "temporary" customer ID to Avalara on certain orders, but changing our exemption settings in Avalara (the one that was triggering an exemption based on customer ID = "temporary") at least helped us resolve the issue of not collecting sales tax for those orders. Wish I could help more here, but aside from making sure you don't have a sales tax exemption set up in Avalara based on customer ID = "temporary", I unfortunately have no other resolutions / explanations to share.

[beckyppsg]

Has any one had a resolution to this?  I talked to Avalara last week and they still can't connect for our account.