I got notice that Shopify will begin collecting U.S. Sales Tax. Will they be remitting it to the tax authority in each state? If not, how do we access the collected tax so we can remit it ourselves?
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Hi @Silkandbriar ,
Great question!
Shopify does not file or remit your taxes for you. What we can do is indicate to you what we believe your tax liability is on The Manage tax liability page.
So, after your store is open and has started to make sales, your sales and locations are automatically monitored to help you determine whether you have nexus in specific states. Your sales into a specific state are compared to that state’s sales thresholds to identify where you might have a tax liability.
This page is not a substitute for advice from a tax authority or a tax professional!
So if sales tax is being collected on each order, it is a part of the order amount you receive. In other words, you will need to set aside that money yourself in order to remit it yourself to the relevant authority. I hope that helps clarify matters!
In the meantime, what is it you’re selling? How are sales going?
But I got notice that Shopify will begin billing me for Mississippi sales
tax. If Shopify collects the tax, I won’t have it available to pay the
Mississippi tax authority.
Shopify does not charge you, the merchant, for sales tax because we do not remit sales tax on your behalf. If you are liable to pay sales tax in your state, then it is up to you as the store owner to pay your local tax authority.
Could you please provide a screenshot of the notice you got please?
Ok so Shopify is starting to charge Sales Tax to merchants in Mississippi (as of July 5th, 2022) for billing. These are billing taxes that we must charge in order to be in line with the legal tax requirements for that state! In this case, Shopify is the seller and you are our customer.
This is completely separate from the taxes you must collect from your customers and remit yourself as the seller.
I hope that clarifies matters!
Yes it does! Thank you.
Excellent! How are sales doing anyway? Do you have a decent conversion rate or do you feel it could be better?
I’d love to know more about your business and brand! Could you tell me a little more about your store and your goals?
Sales are OK. I don’t dedicate enough time to doing the correct things. Conversion rate over time is 1.94 percent.
I’m new to Shopify and I’ve been at big cartel for almost 10 years. You all would be considered a marketplace facilitator just like big cartel which is why they remit taxes I really don’t understand why you all do not remit taxes. You all also facilitate the payment process through Shopify pay. You all technically should be remitting taxes and I’m pretty sure by law we can put that responsibility on Shopify. You All would have to prove you are not a marketplace facilitator in order for us not to put the responsibility of tax remitting on Shopify.
Hi @3GALee ,
I can absolutely appreciate that moving from Bigcartel to Shopify may take some adjusting in terms of the differences in offerings. So I wanted to just clarify the matter for you, to help avoid any confusion.
Shopify provides the platform for your business to sell online. However, it doesn’t collect your customers’ payments, so it doesn’t qualify as a marketplace facilitator.
Shopify Payments is a payment gateway option for some of our merchants to use that process transactions. But the customers are still paying the store, and not Shopify. So Shopify is merely a transactional tool. To be considered a marketplace facilitator, customers would have to be paying Shopify directly who in turn paid the merchants.
Shop Pay is the app that customers can use to purchase products from Shopify stores, but again, the customers are not paying Shopify, they’re paying the store they purchase from. Shopify is merely the middle person here.
This means that other e-commerce platforms such as BigCommerce, WooCommerce, and Magento are also not marketplace facilitators and do not collect sales tax on your behalf.
This is covered in a little more detail by Avalara.