Re: Improper Sales Tax Update

Why is sales tax getting incorrectly updated on customer orders?

EWoodwardWSS
Excursionist
12 0 13

On an order in our store, after the customer checked out but before their card was charged, the sales tax amount was "updated" and the amount charged was reduced. The "update" in the sales tax seems to have remove the county sales tax. That tax is due and should not have been removed. Additionally, Shopify fees were calculated as if the full sales tax had originally be paid, which it never was because the amount was "updated" before the customer's card was charged.

Has this been happening to anyone else?

We are due money from our customer for sales tax charges that Shopify improperly choose to refund, an explanation for why this happened, what Shopify is going to do to ensure that is doesn't happen again.

Replies 21 (21)

EWoodwardWSS
Excursionist
12 0 13

This is now happening to all of our orders from Arizona. WTF?

 

We need Shopify to properly collect the sales tax for us since we are liable to the state for the correct amount of sales tax, not the amount a third party collected on our behalf.

EWoodwardWSS
Excursionist
12 0 13

Now sales tax is being recalculated after checkout in New Mexico as well, but this time it is recalculating to the correct price, but Shopify is still charging us fees based on the original, in this case incorrect, sales tax calculations.

happy-up
Tourist
4 0 4

This is happening to us as well. Shopify is refunding city and county taxes that we still owe. This was not a problem before the new Shopify Tax rollout. It appears to have started in early November, but we did not catch it until we started getting larger purchases from our Holiday shoppers.

 

Here's a screen cap of what is happening to us:

order-3794-incorrect-taxing-example.png

 

 

EWoodwardWSS
Excursionist
12 0 13

Exactly that. When I contacted them, Shopify support basically confirmed that it was the new sales tax system and estimated tax at check out, but they didn't think there was a problem. They wouldn't believe anything was wrong with it until I provided proof from a state source that the tax rate was incorrectly charged. I haven't heard back from them since I provided that proof for one of the orders.

I would recommend that everyone that is experiencing this error contact support to complain since they are more likely to actually look into it if it is affecting a lot of their users.

 

I also don't think we will ever get the money that we are owed for these taxes unless it becomes such a big problem that a class action lawsuit is filed.

bcwaccounting
Tourist
4 0 4

We're having a similar problem.  It started at 10AM on December 1; the State sales tax is still being charged, but the county and city sales taxes are not.  This is only happening to our sales completed through the POS; web orders still appear to be charging the correct sales tax rates.

 

Shopify support told us it's a one-off problem, not yet reported by any other users, and that we'll have to wait for the sales tax team to investigate.

RyanF
Visitor
1 0 2

Happening in Kansas as well. 

 

@Shopify - a solution is needed ASAP.

EWoodwardWSS
Excursionist
12 0 13

This one they only collected 3.9% of tax instead of the correct 9.03%! That's only a little over 40%.
Screenshot 2022-12-02 134414.pngScreenshot 2022-12-02 134455.png

happy-up
Tourist
4 0 4

Do you have any orders before the new Shopify Tax was implemented that were going to the same city/town and were charged tax correctly?

 

I'm currently compiling screenshots of orders that are from before and after the change side by side so they can clearly see what taxes *should* be collected and are no longer.

 

After posting this morning, I started a chat with Shopify. There is now a ticket for us on the issue. 

 

I also asked about opting out of Shopify Tax. I was told that we can, but we would not go back to the previous method of tax calculation. If we opt out, our store would use a different method. That they do not have documentation for at this time.

 

 

SakSaum
Visitor
2 0 3

Anyone had any updates on this? I was on chat with Shopify this morning and they have no solution. All of my Colorado sales are still charging sales tax and then “updating” and refunding the customer incorrectly. 

happy-up
Tourist
4 0 4
Hi--

After getting our tax issue escalated to the "tax team" and a LOT of back
and forth with them, the end result is we opted out of the new Shopify Tax
method.

Shopify Tax was calculating tax rates correctly, but it did not take into
consideration the unique situation of our store and there was no way to
control this from our store settings.

Shopify Tax was calculating USE tax, based on fulfillment location, even
though we are required to collect Sales Tax, regardless of where the order
is fulfilled.

Many states (Missouri included) require retailers to collect Use Tax if
they have nexus within the state, but fulfillment is not originating from
that state. Use Tax, in Missouri, is the base sales tax rate + any
additional municipal sales taxes. It does not require taxes to be collected
for county or special taxing districts.

Once we opted out and made sure our Missouri store was enabled as a tax
location on Shopify, the sales tax calculations returned to what they were
before the Shopify Tax was implemented.

If you haven't found it yet, here's their documentation about their taxing
methods:
https://help.shopify.com/en/manual/taxes/us/choose-tax-service

We're still feeling pretty cranky about the entire situation. And that it
was implemented in 4th Quarter with zero warning, documentation, or way to
opt out.

Hope this helps!
SakSaum
Visitor
2 0 3
Thank you so much for your detailed reply. I am in the middle of the back and forth with the Tax Team. I am hoping for some kind of direction because we are stuck in a rock and a hard place. We were told we cannot go back to the original tax method because only the new Shopify Tax will collect the new Colorado Retail Delivery Fee. Now Shopify Tax won’t charge the correct sales tax for Colorado.
happy-up
Tourist
4 0 4
That's really bad news.
I hope they're able to do something for your store!

Good luck!

soccerfly
Tourist
3 0 0

We're having the same issues for South Carolina too. I've reached out to Shopify support team and my ticket remains open. The response I received was that the tax team will be looking at my orders to see if it continues to be an issue. I had to send an invoice from FreshBooks to a business that purchased a larger order just so they could see the correct tax amount. Total tax was for $184.80 but was miscalculating. I really hope this gets resolved soon and I'm not sure if it can be corrected on our end. 😞

LBiasotti
Visitor
2 0 3

Soccerfly,


We are going through the exact same right now.  Last 70 orders (which all came in quickly) had the tax amount refunded.  We were told it was because of the category of the item.  We had to inactivate the item and just take phone orders and in-person orders.  Really hurting out sales right now.  Hope they get this fixed for all of us ASAP

LBiasotti
Visitor
2 0 3

Same thing is happening to us now.  We released a largely anticipated event and had 70 orders right away.  Every one of them had the taxes refunded.  We can't get Shopify on a phone so for over a week we have been chatting.  Their only suggestion is to check the category of the product and then to refund all 70 orders and go at it again. 

 

jhartwell
Shopify Partner
34 1 14

Are there any updates on this?

jhartwell
Shopify Partner
34 1 14

Ok for me this was an easy fix. Shopify updates their stores to accomodate new Tax Laws. For me they are not charging Sales Tax, because Florida does not charge Sales Tax for Digital Goods. So Shopify added the new category called Digital Goods, so all of my products are Digital, so it charges the customer then refunds them and for some customers it doesn't charge at all.....

So for me the issue was that it was doing this, because of the State Tax Laws.


HDKSLLC
Visitor
1 0 1

STILL HAVING THIS PROBLEM with Kansas sales tax.  I have been over it inside, outside, upside-down with editing my products, etc. to try to get this fixed.  I am beyond DONE with having to make up sales tax that has been refunded to customers through my profits.  WTF??? I have all of my products categorized, have my sales tax ID and business info entered, my locations, etc. all in my store, and the issue is still occurring.  I went round with shopify months ago to try to fix this, and not looking forward to contacting them again about it.  

emkerb
Visitor
1 0 0

did you ever get this fixed?? I am in the same boat… it’s been a month and nothing has been fixed. 

515CustomDesign
Tourist
3 0 1

So what i've found: "in Iowa"

In iowa i found on the department of revenue website a sales tax look up by address.
If I put in an address it will tell me if that address is subject to 1% local option tax or not.   2 houses that are blocks from each other in the same county can have different tax rates.  1 house will get the 1% tax the other will not per my states website.   This matches up with what Shopify is charging or not charging for local sales tax.  

515CustomDesign
Tourist
3 0 1

This is also happening in Iowa, no help from CS.  this is the reply i get.  Its because shopify is (Quite Accurate).  They just want to blame my store, not their issue i guess.  Changing to Shopify basic tax see if that works for me as well. 


"I consulted with our tax team about this and they said based on the details of the order, Shopify Tax determined the 1% should not be charged. I understand you have all products set to be taxed but Shopify Tax is quite accurate and takes into account the complete address plus other auxiliary information (for example product categories) before applying the sales tax."