Shopify charging sales tax for origin and shipping address

[CH5]

I am having an issue where Shopify is charging our customers sales tax based on both where we ship from and the customers shipping location (attached photo). Why is this happening??? In the attached example, sales tax has been charged both for San Diego and for Santa Clara (2 very different locations within California).

[Kimi]

Hi, @CH5.

When it comes to charging sales taxes, while the majority of other states in the US are either origin-based or destination-based sales tax states, California is a hybrid of both. This means that the state, county, and city taxes are based on the origin of the purchase (your location), but district taxes are based on the destination (the buyer's location). You can find more information about this on our help guide here, as well as this third-party document from TaxJar.

Due to the complex nature of tax laws and regulations, and because of the fact that they can change often, if you're unsure about whether or not you're collecting taxes correctly, you'll need to consult with your local tax authority. They can help you verify any tax information specific to your business needs. If you believe that Shopify isn't calculating the correct sales tax amount for your orders however, you can contact our Live Support team so that we can investigate your account in more detail from our end.

To get in touch with our team, you'll need to login to your store via our help centre here. Once logged in, select a topic that best fits your query or situation. From there, you'll be taken to a page with a list of relevant support articles, and you can scroll to the bottom of that page to select your preferred contact method with our team.

Although we aren't tax experts and aren't able to provide tax advice, we do have some guides that you can read. Feel free to take a closer look at them below:

• US taxes reference
• How to charge sales taxes in the US
• Guide to taxes for independent contractors

While Shopify doesn't remit or file your taxes for you, we've recently launched a new feature called Shopify Tax, to help US merchants improve the accuracy of their tax calculations for local customers. If you're a new merchant, then this feature will have already been added onto your store automatically, so I recommend going through our help guide here to familiarise yourself with the functionalities that Shopify Tax currently offers.

[Kruger]

I'm still dealing with this issue.

The TaxJar link you provided describes the exact issue we are seeing here.

"If you only have one location in California, then you’ll charge two sales tax rates. You’ll charge your district rate to buyers located in your district, and the California state rate to buyers outside your district."

Customers in our district, and items shipped from us to our district, pay our districts rates. Any company outside of our district should only be charged the California state rate.

In the example above, assuming the seller is located in San Diego and the buyer in Santa Clara, only the state rate should be charged.

[Kimi]

Thanks for reaching out about your situation, @Kruger.

Have you had a chance to speak with our Live Support team regarding your tax issues?

If you believe that Shopify is incorrectly calculating your store's sales tax, please get in touch with our team so that we can authenticate you against the correct store in order to take a closer look at your tax information from our end. You can use this link, which will take you to the login page of our Help Center so that you can start the authentication process.

Our Live Support team can help look into the matter in more detail and, if required, get in touch with our internal Taxes team on your behalf for further assistance.

[dlevens]

This is not correct information. 

From California Department of Tax and Fee Administration: 

https://www.cdtfa.ca.gov/formspubs/pub177/#district

"However, if you are not engaged in business in a district, you are not required to report and pay district taxes imposed by that district, but you must still report and pay tax at the statewide rate."

[mirima]

Now that I'm doing my California sales tax report for 2023 I am encountering this exact issue. It seems like Shopify is no help. By any chance are you able to share how you filed your sales tax return with California? Did you include all those random districts that you actually didn't have to collect from? And were you able to get in touch with anyone from Shopify to fix this on your account?

[alou]

It's September 2024 and I'm also having this issue. I spent an hour on the phone with customer support but was told that California's hybrid tax rate demands that the taxes be charged for both origin and destination counties. No other help was offered except to switch to Basic tax and adjust manually.

[dlevens]

See this post https://community.shopify.com/c/accounting-and-taxes/shopify-incorrectly-calculating-california-sale...

And just to confirm I am on basic tax and have it set to hybrid-origin and it only collects the state wide 7.25% and for the tax district I am in it collects the additional district tax but only for my district sales.