Financing, tax rates, and accounting
We are required to collect tax in Missouri and Illinois, but we are shipping our products from outside of those states. Shopify's tax documentation says that since we are shipping from outside of those states, that we should be collecting use tax instead of sales tax which our tax advisor also confirmed.
However, when I test using shipping addresses to those states, it shows that it is charging at the sales tax rate instead of the use tax rate.
Illinois has a flat use rate tax of 6.25% so I was able to override the tax collection in that state using the tax override features, but Missouri varies throughout the state so I don't have an override option. I checked with our tax advisors and if we ship products to Kansas City, MO for example, the tax rate should be 7.275% however we are charging 9.85%, which is the sales tax rate instead of the use tax rate.
Has anyone else encountered this before? Is this a known issue?
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