texas sales and use tax charging multiple location taxes within texas

Ron_Miskin
Shopify Partner
20 0 2

I am an online retailer, that lives in the county vs the city. Prior to the sales tax upgrade/update in January, we were charging customers sales tax based on my zip code to the closest city sales tax rate which equaled 8.25%.  Now we are charging the sales tax rate correctly based on my location and zip code including the four-digit rooftop sales tax location.  My question now is that when we ship out products to other locations within Texas we are charging some customers the difference in sales tax based on my location and what I think is a use tax for the destination zip code if we can apply the additional sales tax rates that equal the 8.25%. Very confusing and I can not get a straight answer from Shopify that yes the additional amount is the use tax for that customer. TaxJar, third party, reports don't match now and show that I am collecting additional taxes that should be returned to the State of Texas. Trying to see if anyone else is having this problem. We can not find any settings within Shopify that would indicate we chose this option...... Thank you for any feedback. 

 

Shopify's response is giving me this reference page

https://comptroller.texas.gov/taxes/sales/use-tax.php

Replies 4 (4)

Moira
Shopify Staff
2061 225 327

Hey @Ron_Miskin,

 

It sounds like you are having issues with correctly calculating and collecting sales tax for your online retail business in Texas, and that you are unsure whether you should be charging customers a use tax for their location in addition to the sales tax based on your location.

 

In general, sales tax should be charged based on the location of the customer, not the location of the seller. This means that if you are shipping products to other locations within Texas, you may need to charge a different sales tax rate based on the destination zip code. It is possible that the additional amount you are charging some customers is the correct amount of sales tax for their location, but it is also possible that it is incorrect.

 

One way to ensure that you are collecting the correct amount of sales tax is to use a sales tax automation service like TaxJar or Avalara. These services can help you calculate and collect sales tax based on the location of your customers, and they can also provide you with reports to help you reconcile your sales tax collections with your tax returns.

 

It is also a good idea to consult with a tax professional or accountant who can review your sales tax practices and help you ensure that you are in compliance with Texas sales tax laws. They may be able to identify any issues with your current practices and help you implement a more accurate and efficient system for collecting and remitting sales tax.

Moira | Social Care @ Shopify
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Ron_Miskin
Shopify Partner
20 0 2

Thank you for your reply. I do have an automation service, TaxJar, as I stated in the question in which I also have my second work order put in with them on this issue. My tax professional also questions why Shopify is collecting additional sales tax based on the location I am shipping to within my state.  I am located/based in Texas, and this is my primary location, making Texas an Origin Sourcing when sold within Texas. Again this only changed with this year's new tax upgrade in January.....still looking for a better resolution. As of now, TAXJAR, states I am over collecting. Still seeking a better resolution. 

JeanG
Visitor
1 0 1

Were you able to get a solution?  I am also encountering the same problem with taxes being collected.  It randomly charges sales tax to customers shipped to within the state of Texas.  We also live in the county and I have verified with the State of Texas that only the 6.25% should be collected.  For now, I am reporting and paying the taxes collected, as charged to customers' orders placed on Shopify.  

 

Is there somewhere to override the sales tax rate?  Shopify said it was possible to do but would somehow have to be done on each inventory item, not sure how.

 

When I contacted Shopify they also told me what Shopify told you in March.  I also have confirmed Texas sales tax is based on sale Point of Origin not vs Point of Delivery.

 

Thank you in advance for any assistance you may be able to provide! 

Ron_Miskin
Shopify Partner
20 0 2

nope, have not gotten any resolution from Shopify yet, even after providing information as to the point of origin on Texas sales tax.  Disappointed and frustrated by their lack of understanding on this.