We have wondered this since we started with Shopify, but why does Shopify not allow you to charge tax on a POS in store order that is shipping out of state? They have always not charged tax on out of state shipping orders and we had a work around to collect the tax on the POS for someone buying something in the store. The work around was we would process the shipping order like it was shipping in state and then when we would ship it we would update the address to the out of state address. Now since Aug 24th we did an order this way and Shopify gave us a message on the order after we changed the address that said we owed the customer this amount which was the tax. It is not making us refund but it has actually taken that tax collected at the POS out of the taxes report in Shopify and it sits in never never land somewhere within Shopify, we had to manually record it in our sales tax payable account on our end. I am asking this because I want to know what other stores are doing about this. We feel like it’s unfair to not let us collect the tax for an in store purchase regardless of the where its going, since we are paying for the tax regardless. I would think that Shopify could make it to where when an order is created in the POS sales channel it could charge tax unless we decide to not charge it. Just hoping for some feedback from the community or if a Shopify expert could help us understand the reasoning. Thanks!
I don’t understand what the problem is or why you are trying to collect tax when you may not have an obligation to… here’s why:
Shopify says tax is collected where you have nexus. Nexus is determined by your connection to a state, not just where the sale takes place.
You live in Nevada. You get a customer from Idaho who wants a set of earrings sent to his mother in California. The POS transaction happens in Nevada, the purchaser is from Idaho, and the destination is California. So which state is relevant for tax purposes? Idaho? Nevada? or California? California 
The next question is whether you have nexus in California and are required to collect California tax. For an out-of-state retailer with no other California nexus, the standard is:
“Total combined sales of tangible personal property for delivery in California exceed $500,000 during the preceding or current calendar year.”
If you don’t meet that threshold, you generally aren’t required to collect and remit sales tax for that sale. You can register with California and subsequently add California in your tax Settings, but you’re not required to.
So the question now, is, are you registered in that particular state to collect sales tax, and if not, why are you trying to collect?
Hey @carriec228, Shopify does charge tax on POS orders that ship, it just calculates from the destination address and only collects in the states listed under Settings > Taxes and duties > United States, in the “Regions you’re collecting in” section. If the destination state isn’t in that list, tax comes out zero no matter where the sale happened. Add the state there and your ship-to POS orders will charge it on their own, so you can drop the workaround. And editing the address after the order’s paid recalculates tax against the new destination, which is why the amount you collected stopped matching the tax report. Ring up a test order to that state and check the tax line before you take payment.
If someone is in your store purchasing a product that will be shipped out of state, you are generally still required to collect sales tax because the sale took place in your store.
Incorrect. Most states have destination sourcing. This is easily searchable.. Then comes whether or not you have nexus in the destination state. Point of Sale transaction doesn’t override this. It’s the shipping addres that determines what state to look at when collecting sales tax. If carry-out, the obvious destination is your own state.
This is probably why o.p. is not seeing the tax in the order. Because they don’t have that state set up in Settings. Again, easily searchable. Just use Google if you need some guidance. Even Shopify docs have this terminology. The important detail is that POS does not override this.
If it did, then you’d have a real mess, where buyers could walk into a store in a tax-exempt state, have all their products shipped out of state, and the destination state would receive zero tax on goods being brought into their state.
I had not looked this up in years. In the past the guidance had been to charge sales tax for in-store purchases, but i did another lookup today and your information seems to be correct. If someone buys a product in-store that will be shipped out of state, they aren’t taking possession of it in that state and shouldn’t be charged sales tax.
I am still a little confused. We currently still pay the sales tax for those orders that are not being charged tax, to our state. Is that what everyone else is doing? Or is there some other way we should be doing that? Where do I go to search more about this? Thanks.
I would start looking at your tax return instructions… because your state has plenty in the laws. And plenty of exemptions lines in the return itself by the look of it.
But quite honestly, even though you are saying you “pay”, this is an incorrect mentality. You don’t pay. It’s not you who’s paying. The customer pays. You remit. You should really understand this concept. You collect and remit. That’s it.
If Shopify is not putting tax there, it’s for a reason… Shopify showing $0 doesn’t necessarily mean you’re supposed to make up the tax yourself and send it to your own state… You should have stopped a long time ago and figured out what that reason is. Now Shopify is correctly taking the money back that you are incorrectly taking from customers lol. So from now on, what I would do is verify first, then simply use the tax form to deduct the appropriate exempt sales. Then separately do your tax nexus with the other states… Just as you would with online sales…