Why is sales tax getting incorrectly updated on customer orders?

Accounting & Taxes
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Topic summary

Sales tax is being recalculated after checkout, removing or refunding local taxes (city/county) and reducing the customer charge, while Shopify fees are still assessed on the higher, pre-refund estimated tax. Issue appears tied to the new Shopify Tax rollout (reported starting early November; one POS-specific spike at 10 AM Dec 1).

Reported impacts by state:

  • AZ, NM, KS, CO, SC, IA, CA, MO, FL. Examples include AZ city-only food tax refunded; CO sales tax updated/refunded; KS undercollection; CA wrong jurisdiction; POS-only undercollection for one merchant.

Likely causes vary by case:

  • Shopify Tax using estimated tax at checkout, then “updating.”
  • Use tax vs. sales tax mismatch based on fulfillment location (e.g., MO use tax excludes county/special districts, causing shortfalls).
  • Product tax categories (e.g., FL “Digital Goods” are non-taxable, triggering refunds).
  • Address-level local option taxes (IA) show Shopify’s rates can match state address lookups.

Workarounds/updates:

  • Some merchants opted out to a different tax method and enabled correct tax locations, restoring prior behavior; others cannot due to requirements like Colorado Retail Delivery Fee (only supported by Shopify Tax).
  • Multiple tickets opened; Shopify staff advise contacting support with order examples. Screenshots were provided.

Status: Ongoing; no platform-wide fix announced. Key unresolved issues: accurate local tax collection and fee calculations on post-checkout adjustments.

Summarized with AI on December 20. AI used: gpt-5.
16

Soccerfly,

We are going through the exact same right now. Last 70 orders (which all came in quickly) had the tax amount refunded. We were told it was because of the category of the item. We had to inactivate the item and just take phone orders and in-person orders. Really hurting out sales right now. Hope they get this fixed for all of us ASAP

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