Is the tax collection rate system in Shopify POS accurate?

[mhlavacek]

Basically, their tax collection rate system is incredibly inaccurate, costing me to pay taxes that should have been collected if their system wasnt completely inaccurate. When you enter in an address to collect sales tax, they do not have the correct tax rate system. I entered my correct address, which on the government website has a 3.5% local sales tax rate, but because Shopify POS is super behind, they use a "Basic System" to determine the tax rate, which is 4% lower than it should have been, leaving ME to pay the remaining taxes out of pocket. I am not sure how this app is even legal if they cant even provide the correct tax rate!

[Shay]

Hi @mhlavacek 

Thank you for reaching out about this and sharing your experience. I definitely understand how important it is to get this resolved. If your automated taxes are not calculating properly either online or through the Shopify POS you will want to review the tax rates you have set up in your admin under Settings > Taxes. Some businesses do need to set up manual tax rates or tax overrides to ensure that taxes are charged properly. You can learn more about setting up your tax rates on Shopify here: Location-based tax settings · Shopify Help Center.

You do have full control over the tax rates being charged on your store so this is definitely something that can be fixed. If you need additional help with this please reach out to our live support for real time troubleshooting. To access our live support, please follow this link: Shopify Help Center. Next, you will want to follow the on screen prompts to sign in, choose your topic and issue and at the bottom of the help articles provided will be all available live support options. 

[mhlavacek]

Hi Shay, 

I reached out to Shopify support who explained to me that because Shopify's address system only uses "ballpark" tax ratings, that they do not collect the tax for specific addresses, so if you live in a major city or an area with multiple tax codes, Shopify only uses an umbrella tax code. 

If the information that I was given from the Shopify Support representative was wrong please let me know!

Thank you!

[Shay]

Hi @mhlavacek 

Thanks for the update! I reached out to our tax team as well for additional clarification, and I can share a bit more context on this topic for you. 

We recently rolled out a much more accurate tax system but it has not yet been made available through Shopify POS yet. As you have noted, in some cases a single zipcode/state may have multiple tax rates which the Shopify POS system is not able to differentiate at this time. 

The system is designed to default to the highest tax rate used in that district or the highest population density. It sounds like there is a disparity between the highest density vs highest rate, which is causing the system to choose a lower rate for those orders as a default. 

This is what your support advisor was referencing when they said an "umbrella rate", the umbrella rate is the highest rate/densest pop. as chosen by the tax system. Until the new, more accurate, tax system is rolled out to POS users, we recommend setting a tax override for that area to default to the highest tax rate for that district.