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Destination based sales tax from out of state sales on NON Shopify Plus Stores

Brian_Needels
New Member
3 0 0

So it appears there is a major hole in Shopify's tax calculations that will cause many sellers major tax collection issues and Shopify does not have a solution to solve the problem. 

I'll use Arizona as an example. Arizona is an origin-based sales tax state for orders shipped from within Arizona. Meaning if you ship an order to Arizona from Arizona you collect tax based on your business location. Shopify works great for this scenario in Arizona.

For orders shipped to Arizona from outside or Arizona, Arizona is a destination based sales tax model. So you collect tax based on the location of where you ship the order. Shopify fails here UNLESS...you enter every zip code for the state of Arizona.

Not really a problem if you didn't have to do it one at a time through the web interface. Once you have more than a couple thousand zip codes entered it takes 46 seconds to add a zip code to a state. So to do 2600 zip codes that's approx 33 hours of labor. Now there are several states that have this scenario (Virgina and Ohio are a couple more) so you could need to input up to 15,000 zip codes for accurate tax collection.

All we need is the ability to upload a two column spreadsheet, State name, Zip code, the same two fields you enter in the web form. This would reduce a 33-hour task to about 33 seconds.

Shopify did respond that this can be done through the API but I have yet been able to confirm this is possible.

Has anyone had success in adding state zip-codes to the database using the Shopify API on a non-Shopify Plus store?

Thanks. 

 

Replies 38 (38)
Randy15
Tourist
4 0 1

Hi Brian,

I'm wondering if you made any progress on this issue.

I'm also noticing that even if I do add a specific out-of-state zipcode I want to ship to (i.e., I'm running simulation orders), the tax rates aren't even accurate.

Any thoughts you have would be greatly appreciated!

Randy

Polaris_Tax___A
New Member
8 0 0

Brian and Randy,

 

Our Accounting Firm works with many clients in the eCommerce space, and sales tax is a huge hot topic for the entire industry. I would suggest looking beyond Shopify to address your Sales Tax needs. We have foound Tax Jar to be a great solution for many of our clients.

With that said, there are many pitfalls related to Sales Tad therefore, I always adise business owners to work with an Accountant to make sure the stay in Compliance with Sales Tax.

If you have any additional questions, feel free to reach out to us at our Polaris Tax & Accounting Website.

Joe Serrone Polaris Tax and Accounting Phone: 704) 947-3178 Web: www.polaristaxandaccounting.com
wendyweeber
Excursionist
10 0 9

I had to enter all California zips and it was a giant pain in the neck. It works now, but I would have greatly preferred a spreadhseet-based upload as you suggest.

 

Shopify devs are working on this problem since the supreme court Wayfair decision has pushed this issue front and center for stores that need to collect taxes from multiple states (economic nexus). 

 

TaxJar actually has nothing to do with generating accurate tax rates while your customer is buying something -- Shopify adds tax to the sale. Taxjar helps you figure out what you owe and file taxes.

dizzlebabe
Excursionist
22 0 12

It's pretty disheartening that you discovered this issue back in January of 2018, and here we are at the end of 2019, when sales tax is such a huge issue now for online retailers because of the Wayfair court ruling, and Shopify STILL hasn't solved this issue. You were asking for a solution to be able to upload your spreadsheet, but honestly, the solution needs to be at the core of Shopify, and they need to develop code to allow online retailers the ability to collect sales tax correctly. For instance, when setting up sales tax rates in Shopify for those states in which you have economic nexus, it is ridiculous that we have to enter a random zip code in order to add a state to the tax rate table in Settings and act as though we have physical nexus. Shopify's tax rate settings should be able to handle the distinction between economic nexus and physical nexus, and then apply the correct tax laws accordingly so that we don't have to spend hours adding every dang zip code in the states in which we have issues. I am having this issue with Viriginia. I have economic nexus in Virginia, which is an origin based state. Well I don't have a physical presence in Virginia, and I happed to pick Charlottesville as the zip code I entered to add the state to the tax rate table. So now all of my customers are being charged Charlottesville sales tax. Fortunately, it is the same as most of the state. But Virginia requires out of state sellers to collect as though it were a destination based state. So I could spend my precious time working around Shopify's flaw, or I could just decide to eat that monthly cost of the sales tax I won't be collecting but still need to remit. Fortunately TaxJar is smart enough to know legally what I owe to each jurisdiction, so I'll get my payment correct even if I'm not collecting the full amount. But it's ridiculous that Shopify hasn't fixed this. Perhaps they're working on it, but for this topic, which is such a big deal right now, I really wish they'd give us some information about when we can expect this problem to be solved on the platform.

blufinance
New Member
7 0 0

I just asked support this week about bulk zip code upload...still not available.

pcoco714
Tourist
3 0 0

I really hope there will be an update for this issue soon!!!! @shopify

Sophia
Shopify Staff
Shopify Staff
1183 81 140

@Brian_Needels wrote:

So it appears there is a major hole in Shopify's tax calculations that will cause many sellers major tax collection issues and Shopify does not have a solution to solve the problem. 

I'll use Arizona as an example. Arizona is an origin-based sales tax state for orders shipped from within Arizona. Meaning if you ship an order to Arizona from Arizona you collect tax based on your business location. Shopify works great for this scenario in Arizona.

For orders shipped to Arizona from outside or Arizona, Arizona is a destination based sales tax model. So you collect tax based on the location of where you ship the order. Shopify fails here UNLESS...you enter every zip code for the state of Arizona.

Not really a problem if you didn't have to do it one at a time through the web interface. Once you have more than a couple thousand zip codes entered it takes 46 seconds to add a zip code to a state. So to do 2600 zip codes that's approx 33 hours of labor. Now there are several states that have this scenario (Virgina and Ohio are a couple more) so you could need to input up to 15,000 zip codes for accurate tax collection.

All we need is the ability to upload a two column spreadsheet, State name, Zip code, the same two fields you enter in the web form. This would reduce a 33-hour task to about 33 seconds.

Shopify did respond that this can be done through the API but I have yet been able to confirm this is possible.

Has anyone had success in adding state zip-codes to the database using the Shopify API on a non-Shopify Plus store?

Thanks. 

 


Hi, @Brian_Needels.

 

Sophia here from Shopify. I appreciate you taking the time to express your concern about the tax setup in the Shopify admin. Since it's been quite a while from the time you created this post, I'm interested to know if you've come across any workarounds such as third-party apps or other custom solutions to accommodate your store's tax requirements.

I discovered this thread because of the newest replies that were posted, and I wanted to let you know that our Technical Support team might be able to help if you find that Shopify's setup for economic nexus in the United States doesn't work for your store and you either need to:

 

These changes are not exclusive to Shopify Plus. Keep in mind that if you need to treat all states as destination states, you will still need to enter a zip code for each state you need to charge taxes in (this change would just ensure that origin states are treated as destination states instead). If you're still looking for a solution, please let me know and I can send you an email to further discuss your business' tax needs.

When you contacted Shopify Support regarding the tax setup, did our team submit feedback on your behalf based on your store's specific needs? If not, I would love to share your use case with the appropriate teams here in case further adjustments can be made going forward to how the Shopify admin handles taxes. Thank you so much!

Sophia | Social Care @ Shopify 
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Sophia
Shopify Staff
Shopify Staff
1183 81 140

@Randy15 wrote:

Hi Brian,

I'm wondering if you made any progress on this issue.

I'm also noticing that even if I do add a specific out-of-state zipcode I want to ship to (i.e., I'm running simulation orders), the tax rates aren't even accurate.

Any thoughts you have would be greatly appreciated!

Randy


Hi, @Randy15!

Sophia here from Shopify. The tax rates calculated by Shopify are updated regularly, but if you come across any that appear to be inaccurate, please contact our support team so that we can investigate promptly. If you've determined with a tax expert that your store either needs to add a nexus for every state or needs to treat every state as a destination state, our Technical Support team may be able to help you out. I'd be happy to look into this for you if you're still in search of a solution for your tax setup.

Sophia | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

dizzlebabe
Excursionist
22 0 12

Hi @Sophia !

 

I have complained to Shopify support on numerous occasions since October 2019, and I have written a post on this thread, and created my own thread on the topic. Although I was told that my concerns were conveyed to Technical Support, and that "they're working on it," I was never offered what you offered to @Brian_Needels below:

 

I discovered this thread because of the newest replies that were posted, and I wanted to let you know that our Technical Support team might be able to help if you find that Shopify's setup for economic nexus in the United States doesn't work for your store and you either need to:

 

These changes are not exclusive to Shopify Plus. Keep in mind that if you need to treat all states as destination states, you will still need to enter a zip code for each state you need to charge taxes in (this change would just ensure that origin states are treated as destination states instead). If you're still looking for a solution, please let me know and I can send you an email to further discuss your business' tax needs.

 

I would be elated if Technical Support could customize my taxes in the few states for which I'm having issues. The issues come in for states like Ohio, Virginia, and Arizona to name a few, where, as Brian described, are typically origin-based states, but turn into destination-based states for out-of-state resellers. But Shopify's tax setup can't handle this. Can you please get me in touch with Technical Support for personalized care on setting this up? As it stands right now, I refuse to waste the hours described in this thread to enter thousands of zip codes. I decided to just pick the zip code with the lowest tax rate in the state, and eat the cost for anyone making purchases from a different zip code with a higher tax rate. But that is not even legal in some states, from what I've been told. So I would love some help to set this right.

Sophia
Shopify Staff
Shopify Staff
1183 81 140

@dizzlebabe wrote:

Hi @Sophia !

 

I have complained to Shopify support on numerous occasions since October 2019, and I have written a post on this thread, and created my own thread on the topic. Although I was told that my concerns were conveyed to Technical Support, and that "they're working on it," I was never offered what you offered to @Brian_Needels below:

 

I discovered this thread because of the newest replies that were posted, and I wanted to let you know that our Technical Support team might be able to help if you find that Shopify's setup for economic nexus in the United States doesn't work for your store and you either need to:

 

These changes are not exclusive to Shopify Plus. Keep in mind that if you need to treat all states as destination states, you will still need to enter a zip code for each state you need to charge taxes in (this change would just ensure that origin states are treated as destination states instead). If you're still looking for a solution, please let me know and I can send you an email to further discuss your business' tax needs.

I would be elated if Technical Support could customize my taxes in the few states for which I'm having issues. The issues come in for states like Ohio, Virginia, and Arizona to name a few, where, as Brian described, are typically origin-based states, but turn into destination-based states for out-of-state resellers. But Shopify's tax setup can't handle this. Can you please get me in touch with Technical Support for personalized care on setting this up? As it stands right now, I refuse to waste the hours described in this thread to enter thousands of zip codes. I decided to just pick the zip code with the lowest tax rate in the state, and eat the cost for anyone making purchases from a different zip code with a higher tax rate. But that is not even legal in some states, from what I've been told. So I would love some help to set this right.


Hi, @dizzlebabe!

Thank you for expressing your concern here. I know that the South Dakota v. Wayfair, Inc. ruling complicated the way that taxes need to be handled, and I'm happy to let you know that our Technical Support team may be able to help you if you need to add a nexus for every state or treat every state as a destination state. I'll send you an email so that we can take a look into this with the Technical Support team.

Sophia | Social Care @ Shopify 
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 - To learn more visit the Shopify Help Center or the Shopify Blog

Sophia
Shopify Staff
Shopify Staff
1183 81 140

@blufinance wrote:

I just asked support this week about bulk zip code upload...still not available.


Hi, @blufinance!

Sophia here from Shopify. While it isn't possible to upload a file of zip codes to the Shopify admin's tax settings at this time, our Technical Support team may be able to help if you need to add a nexus for every state or treat every state as a destination state.

 

For your reference, I recommend keeping these resources on hand:

If you've spoken with a tax expert and determined that your business needs to set up economic nexus and that  Shopify's economic nexus settings  don't work for you, let me know and I'd be happy to send you an email so that we can further discuss your business' tax needs.

Sophia | Social Care @ Shopify 
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 - Was your question answered? Mark it as an Accepted Solution
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Sophia
Shopify Staff
Shopify Staff
1183 81 140

@pcoco714 wrote:

I really hope there will be an update for this issue soon!!!! @shopify


Hi, @pcoco714!

Sophia here from Shopify. I'm happy to let you know that there is an update—if your business needs to add a nexus for every state or treat every state as a destination state, our Technical Support team may be able to help.

 

To clarify, the tax settings in the Shopify admin will allow you to enter a zip code for any physical presence your business has. These settings let your store charge taxes based on the origin state and destination state rules. The South Dakota v. Wayfair, Inc. ruling in June 2018 complicated this, as your online business could now be liable for paying sales tax on orders made in states and counties where you do not have a physical presence but do have an economic presence (or nexus).

 

If you've consulted with a tax expert and determined that Shopify's setup for economic nexus in the United States don't meet your needs, let me know. I would be happy to send you an email to discuss this further with you.

Sophia | Social Care @ Shopify 
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blufinance
New Member
7 0 0
How do I set up our economic nexus with tech support help?
I already paid someone to enter hundreds of zip codes for one site but definitely want to avoid this for our second site.
Sophia
Shopify Staff
Shopify Staff
1183 81 140

@blufinance wrote:
How do I set up our economic nexus with tech support help?
I already paid someone to enter hundreds of zip codes for one site but definitely want to avoid this for our second site.


Hi, @blufinance!

Sophia here from Shopify. Can you tell me a bit more about your store's tax requirements?

If you need to treat all states as destination states or add a nexus for every state, our Technical Support team may be able to help. If your sore requires a more customized tax setup, it might be best to use tax overrides and exemptions for the time being, but I'd be happy to submit feedback to the appropriate teams here based on your unique use case.

Sophia | Social Care @ Shopify 
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blufinance
New Member
7 0 0
We are treating all states as destination states.
Sophia
Shopify Staff
Shopify Staff
1183 81 140

@blufinance wrote:
We are treating all states as destination states.

Okay. I've sent you an email so that I can authenticate your account and take a look at your store's tax settings. From there, I'll be able to chat with our Technical Support team and let you know whether they're able to adjust the settings for you so that all states are treated as destination states.

Sophia | Social Care @ Shopify 
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thefoggydog
New Member
5 0 0

Hi Sophia - we have the same problem too. We are based in California but have economic nexus in 17 states, including Virginia. Can you have the technical support team help? Thank you,

 

Rose

LaurenMaiman
Tourist
6 0 1

Hi, Sophia!  Struggling with the same issue that many others here seem to have encountered - specifically that sales tax isn't calculating correctly in our home state of California (only charging 7.25% when it should be 7.75%, presumably because of a mix of destination and origin based taxes).  Other than pretending we have a physical presence in every single zip code in California (so that it calculates the county taxes correctly), what can we do?

Sophia
Shopify Staff
Shopify Staff
1183 81 140

@thefoggydog wrote:

Hi Sophia - we have the same problem too. We are based in California but have economic nexus in 17 states, including Virginia. Can you have the technical support team help? Thank you,

 

Rose


Hi, Rose!

The tax settings in your admin will allow you to enter zip codes for each state in which you have an economic nexus. If the issue is that you need to treat all of these states as destination states, our Technical Support team may be able to help. Otherwise, I can submit detailed feedback to the appropriate teams here on your behalf if these solutions don't quite fit your business needs.

Sophia | Social Care @ Shopify 
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 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog