When running a store, do we need to charge sales tax if we don’t have a nexus? Do we have to we owe these taxes? For example, if my store is in RI, and someone buys something in CA do I owe that sales tax to CA or RI?
Without nexus, you generally don’t need to charge sales tax. Nexus is a connection between your store and a state that creates a tax obligation. If you don’t have nexus in a state, you’re typically not required to collect sales or use tax there.
For your RI to CA example: If your store is in Rhode Island and you sell to a California customer, you would only owe sales tax to California if you have nexus there (not to RI for that sale). Without California nexus, you wouldn’t charge or owe sales tax on that transaction.
To learn more about how nexus works, check out this help page.
How can we ensure this is set up properly in Shopify? It used to do this automatically. I am in Colorado and yesterday it charged me sales tax in Texas. Did Nexxus in Texas change? Or did the Shopify system change? Both?
Through Shopify Tax, we offer Tax liability insights, more on this help page, to help inform merchants of which jurisdictions you may have or be approaching liability in.
In terms of it happening automatically, this may have been for sales through the Shop channel, more context on this here.
Thanks Willie. This is helpful. So I just checked, the order was indeed through Shop. So Shopify collected the sales tax from me and will pay it automatically for me. Do I have that right? For any Shop orders?
Yep, that’s correct.
Starting on January 1, 2025, the Shop channel automatically collects, remits, and file taxes for all orders shipping to or within the United States. The Shop channel collects taxes on orders in all states (plus the District of Columbia) that administer statewide sales tax, as well as Alaska local sales tax. Tax is reported under SC Commerce Services Inc.