Hi, I just had this pop up on my homepage: "You may have a sales tax liability in 1 U.S. state"
I have slightly over $20K in sales over the past year from ALL states. From what I understand--my location Massachusetts, requires you to collect sales tax if you have reached over 100K in sales within MA in the preceding calendar year.
Am I reading this incorrectly? Wondering why Shopify is telling me this?
Thanks for getting in touch. Shopify has recently rolled out a feature that notifies merchants in the US when they may have a tax liability in a state. The feature is not designed to replace any advice from a tax professional, but is designed to help merchant understand when they may be liable to charge and remit sales taxes in a state.
You are seeing this message as our system indicates that you may have met certain thresholds in terms of sales to Massachusetts. According to our US taxes reference, the $100k p/a sales threshold for the state is correct. Do you know how many orders you've delivered to customers in MA? Can you also tell me in which state you are based?
Thanks for the thoughtful reply Victor. I am based in MA and have only $3000 sales within my state of Massachusetts.
However from my understanding after reading extensively on the subject it sounds like any online seller in Massachusetts needs to collect sales tax if they are physically located in the state, regardless of the number of transactions and sales.
Does that sound correct?
Yes, that is likely the case. Tax nexuses can be based on both physical and economic factors. If you're physically based in a state, such as you being located there or if you have a warehouse, office or employees in a state, then you will most likely be deemed to have a tax nexus in the state in question. Having a tax nexus in a state means you are probably required to register with the state tax authorities and need to charge and remit sales taxes for orders made by customers in the state.
I would therefore recommend looking into tax registration for the state of Massachussetts and to register as soon as possible. Once you're registered and are provided with a sales tax ID, you can enter this into your Shopify tax settings so you can begin charging tax to your customers. You may wish to speak with a tax professional if you are unsure of your obligations or how to register and remit sales taxes.