Below I’ll attach a screenshot of how the refund process SHOULD work. This is from Woo Commerce.
You’ll see that you can refund the total (net amount) or any sales tax. In this case I refunded a customer 15% as they forgot to add their coupon code. So that means 15% of product amount, 15% of GST and 15% of PST.
On Shopify you can only give a partial refund out of the net amount but obviously this makes no sense! There needs to be equal portions refunded out of sales tax as well. Without this core feature the reports are wrong on Shopify. Resulting in underreporting net sales and overreporting sales tax. Any merchant who uses sales tax reports to remit sales tax is remitting too much! Since Shopify will not touch sales tax on a partial refund.
There needs to be a way to edit line items OR simply add a checkbox where you can choose to include sales tax on the refund.
To go the extra mile, Shopify should allow merchants to apply coupon codes to past orders which would make it so customers can’t circumvent the system by still being able to use the coupon code after receiving the partial refund. (If the coupon code was set to only 1 time use).
Shopify needs to think about what common workflows are for e-commerce. And anyone who has been in e-commerce knows that customers always forget their coupon codes.
Having a streamlined way for merchants to apply coupon codes to past orders would really help streamline our daily processes.
But the main problem here is that the reports on Shopify are completely skewed and useless if any merchant has issued a partial refund for the selected reporting period.
In summary, if you have given a partial refund. Your reports are wrong!! Quite a big deal if you ask me since reporting should always be accurate.
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Hey Sam - truly insane problem and I’ve just realized that we’ve overpaid on sales taxes by hundreds of thousands of dollars.
Did you ever find a solution for this? I see there has been no help or response from Shopify support…
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Hi John, sorry to hear that. You should definitely work with your account and get your money back, you can still file with the tax authority and get all the sales tax you overpaid. I don’t know the exact details but an accountant would know. There is no fix from Shopify sadly. It’s extremely sad because the majority of Shopify merchants are overpaying sales tax as the sales tax in ‘reports’ are always overstated, its the amount before any partial refund is taken into account. So any bookkeeper who is filing sales tax who doesn’t understand the way Shopify treats partial refunds in the reports, they are overpaying sales tax since the raw numbers in Shopify ‘Sales Tax’ are 100% overreporting.
There is a workaround. You or your bookkeeper need to do an extra step by manually subtracting the partial refunds sales tax out of the correct sales tax authorities. It’s just an extra step that we should not have to take, but thanks to Shopify, there is no other way.
Just to be clear, a FULL refund will correctly reduce the sales tax appropriately, it’s only for partial refunds where the issue occurs. The issue is that the partial refund only comes out of net sales (product subtotal) and doesn’t subtract the sales tax portion.
Hope this helps!
Been dealing with this cluster as well. Why can’t shopify resolve such simple and obvious programming issues? We have to file taxes in several states and due to this error none of the automated sales tax tools properly picks up refunds from shopify. Each state, each report will require manual work to back out the refunded sales tax. Maybe someone who speaks Canadian can call and run this up the flagpole over there?
If you use Quickbooks (I use Quickbooks Online specifically) there is an app in the Shopify app store called WeIntegrate. It imports sales, sales tax and products from Shopify to Quickbooks. I’ve had it since the first of the year and ALL sales tax information goes to QB seamlessly. It won’t help with the past tax issues but not having to look at the Shopify sales tax liability reports ever again is worth its weight in gold. It has extremely thorough “how-to” tips and set up guide with lots of different options. It’s also a lot cheaper than the other connectors!
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Should not have to use another APP to diagnose this issue. Wow had no idea of the problem with partial returns and the taxes!
I found huge refund discrepancy.
