Why is sales tax from shipping being automatically refunded after order completion?

dpfpartsdirect
Tourist
6 0 10

Hello,

 

We are having some issues with sales tax being partially refunded automatically since the new Shopify Tax started. For example, have nexus in California and we charge sales tax on the shipping as well as the products. Shopify never had an issue with this and used to correctly function, but now we are having issues where the portion of sales tax that is being collected for shipping is being instantly refunded to the customer once the order is completed.

 

In our settings I have CA set to "always charge tax on shipping", so why is it refunding that portion of sales tax after the sale is complete?

 

For example our order #3760 is $25.03 for products, and $10 shipping. Sales tax rate is 8.5%.

Sales tax collected at order completion is $2.99. This is the correct amount for our tax liability.

 

Immediately after completion there is a note from Shopify saying "Tax amount was updated from $2.99 USD to $2.13 USD." There is another note saying "$0.86 USD refund will be deducted from your Nov 9, 2022 payout."

 

I can only assume that the $2.13 is based on the taxes of the product ($25.03 x 8.5%). So my question is why is the tax we want charged for freight being refunded to the customer? Luckily we run all of our sales through our ERP so we are able to use the correct tax liability, but this means that we are now eating the difference. Any help is greatly appreciated, I have tried chat support and I was just told it is happening because tax was overcharged, which is not the case.

 

Thanks,

 

 

shopify CA sales tax settings.jpg

shopify 3760 tax refund.jpg

Replies 18 (18)

stemfinity
Visitor
1 0 1

Same issue.

Screenshot 2022-11-15 191807.jpg

dpfpartsdirect
Tourist
6 0 10

@stemfinity  Were you able to make any headway on this? After going around and around with support they said to opt out of the new Shop Tax program. I opted out and it says that it will continue to use Shop Tax until Jan 1st, at which point they will show how to use the legacy software that works correctly. This is absolutely ridiculous, seems that none of them understand that almost everyone should actually collect tax on shipping.

HSSNV
Visitor
1 0 0

I don't offer shipping and it is refunding all of my collected sales tax.  I also opted out of the program and it is keeping me in until the first as well.  I am beyond frustrated, especially as a new business, I can't quite afford to cover everyones taxes.

 

kcgepford
Shopify Partner
1 0 0

Nothing has been resolved for us either yet.  

dpfpartsdirect
Tourist
6 0 10

@kcgepford @stemfinity Hi, my case was finally escalated to the tax support side who have finally acknowledged there is an issue. Just wanted to let you know, hopefully they will get it fixed for all of us.

dpfpartsdirect
Tourist
6 0 10

Just an FYI, my case finally got escalated to the tax support team, and they agree that there is something wrong.

gpwmanager
Visitor
1 0 1

Facing the same issue as well. It seems very random which orders it actually charges taxes for, for the rare occurrence it doesn't automatically refund, but I'm finding most of the orders I receive end up getting the taxes refunded. Have they figured out a solution for this? I was going to make a post about this as well until I saw yours, I'm glad to know I'm not the only one that's experienced this!

miles1341
Visitor
2 0 0

Wondering if you came to any resolution with this issue. I'm experiencing the same problem with my shop. 

Savannah0519
Visitor
1 0 0

How did y’all opt out of the new Shopify tax program? I’m having the same issues! 

dpfpartsdirect
Tourist
6 0 10

@Savannah0519  After going around and around with support I finally got it escalated to someone that understood the tax side (of course they realized this is a legit issue) so they had our store rolled back. I'm not sure if you can do it yourself or even request it without getting support involved. I will say that it has been working now as desired for about a month. My concern now is that they will remove the legacy program and force us to "upgrade" in the near future.

brookehembry
Visitor
1 0 1

We are having the same issue where refunds are being deducted from our Payouts for no reason. Then when I chat in to support they tell me it's a tax issue but they can't give me any resolution. This is costing us way too much money. Shopify - please help?!

Bradley21
Tourist
11 0 0

same

TRDSnaxguy
Visitor
1 0 0

Has anyone heard back from support about this issue?? I had to stop production because it's costing way to much. Any support is appreciated!

IconMike
Visitor
1 0 0

Hey! Just giving you guys an update.

 

Our company has experienced the same issue with ''SHOPIFY TAX''. I spoke with the shopify team and their tax team is supposed to contact us. They will refund us for each transaction affected by this glitch on their end.

 

You should contact their support to mention you've experienced that issue, They are aware of the problem. I'm not quite sure why it has been so long and still not completely fixed though...

Boomn
Shopify Partner
1 0 0

Did you end up getting this resolved?  And, did they refund you for the transactions? 

miles1341
Visitor
2 0 0

HI — have you resolved this? I'm experiencing the exact same issue. Support is saying that taxes "will go where they're supposed to go" but that they do not remit. 

Shopbayleebrook
Visitor
3 0 0

Hey Miles my taxes are doing the same, this just started in September. Have you heard back from them? Is this resolved for you?

Honor_Printing
Tourist
3 0 1

I was having this same issue this week where the sales tax was being refunded back to the customer without my knowing about it. The solution for me was to make sure the product was setup as a "shipping" product and not a "digital" product as the digital products were not collecting sales tax. My items for sale were apparel so I had to go into each variant (size) of my product and check the box for "shipping" at the very bottom and then save it each time. That seems to have done the trick for me.  The pic below has the area circled in red that I had to check. Again, this has to be done for each variant and saved. Hope this helps someone.

Screenshot 2023-10-05 194600.png