How do I correctly apply tax exemptions for clothing sales in New Jersey on my online store?

How do I correctly apply tax exemptions for clothing sales in New Jersey on my online store?

mec720
Tourist
6 0 1

I just started selling on my online store. We are based out of New Jersey and are registered to collect taxes in NJ. However, I sell mostly clothing and some accessories. In the state of NJ, clothing is tax exempt. I have categorized all my products to reflect clothing and accessories where applicable.

 

However, I've experienced some issues with the way Shopify charges my customers taxes. For some orders made within NJ, it does not charge taxes on the clothing items (which is accurate), however, there have been some orders made within NJ that it charged taxes on even though all the items were clothes and they were ordered and delivered to a NJ address. 

 

Has anyone had a similar issue? I don't want to inaccurately be charging my customers tax when there shouldn't be tax charged because they are in a tax exempt state. I was under the impression that Shopify sorted this issue out for you (especially after categorizing your products), but maybe I am wrong and have missed an additional step.

 

Appreciate the help! Thank you!

Replies 8 (8)

Elias
Shopify Staff
3010 294 522

Hey, @mec720.

 

Thank you for reaching out and bringing this to our attention!

 

If you're seeing that the tax override is working for some orders within NJ, then it's safe to say that the clothing tax override was setup properly. However, as the sales tax is affected by several factors in the US, then this may also be an expected behaviour and we may recommend consulting with a local tax advisor. 

 

In the US, the sales tax that you should charge is affected by the following factors:

  • The location that your product is shipped from
  • The location that your product is shipped to
  • Where you're registered to collect tax
  • Item taxability
  • Buyer exemptions

That being said, if you're confident that some of these orders have been charged the wrong taxes, then it looks like we'll need to access your account in order to get a closer look at the affected orders. While we're unable to provide account-specific support via the Shopify Community, we'd be happy further assist you through live chat or emails. Please visit the Shopify Help Center and login to your account to create a support request.

 

I noticed that you're a new member of our Shopify Community! Once you've resolved the tax issue with our live support team, I'd love to hear more about your experience so far and share some resources to help you get started. Do you have a marketing plan prepared for your clothing and accessories store?

 

Elias | Social Care @ Shopify 
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SKU
Not applicable
1 0 0

We are experiencing the same issues recently.  Some NJ orders were processed without sales tax and some NJ orders were charged with sales tax.  This just started happening recently.  Do you have any further explanations or solutions?

Elias
Shopify Staff
3010 294 522

Hey, @SKU.

 

Thanks for joining the thread and posting this question.

 

I understand that you're seeing some discrepancies with the sales tax for orders placed in and/or from New Jersey. However, it's important to note that there are several factors in the US that determines how the taxes are calculated, and this can vary between states. These factors include: 

  • The location that your product is shipped from
  • The location that your product is shipped to
  • Where you're registered to collect tax
  • Item taxability
  • Buyer exemptions

If you'd like to learn more about tax liability, then we'd recommend taking a look at our guide. Nonetheless, we'd encourage consulting with the local tax authorities or a tax professional in order to verify that you're charging your customers the correct tax rates and ensure that you're filing and remitting your taxes correctly.

 

That being said, if you believe that your tax rates are correct and there's an error on some of these orders, then it looks like we'll need to access your account in order to get a closer look at the problem. While we're unable to provide account-specific support via the Shopify Community, we'd be happy to further assist you through live chats. Simply visit the Shopify Help Center and login to your account to create a support request.

 

I noticed that you're a new member of our Shopify Community as well and I'd love to hear more about your business. What types of products are you selling? Do you have a marketing plan prepared for your store?

 

Elias | Social Care @ Shopify 
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11ty
Visitor
3 0 0

Hi,

We are having the same issue. We passed the threshold to have to collect tax in NJ, although we don't physically have a store there (we have several locations in other states and we ship to NJ from these other locations). It's mindboggling that nobody else is reporting this issue and there is no clarity/documentation from Shopify on how to categorize products so the sales tax is applied when it needs to be applied. I've been going back and forth with a customer service rep from Shopify for days and he still doesn't have a solution. 

Elias
Shopify Staff
3010 294 522

Hi, @11ty.

 

Thank you for bringing this to our attention.

 

I understand that you've passed the threshold and you need to start collecting and remitting the sales tax. However, due to varying regulations between countries and states, we're unable to provide this level of tax advice. Instead, we'd recommend speaking with a local tax advisor and reviewing our guide on State tax reference for New Jersey. From there, you'll also find a link for more information on remote sellers: New Jersey Enacts Economic Nexus Legislation. Once you've confirmed the the sales tax requirements with a tax advisor, I'd recommend requesting for specific documents that can be shared with our Support Advisors so that they can loop in our Tax team to help meet the needs of your store. 

 

If you have any other questions on this topic, then don't hesitate to let me know!

 

Elias | Social Care @ Shopify 
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11ty
Visitor
3 0 0

I have the same issue, although Shopify NEVER applies the NJ sales tax, except on custom sales. I categorized Backpacks and Handkerchiefs, which are taxable according to NJ sales tax regulations, but the orders in Shopify are coming up with no sale tax. 

Trevor
Shopify Staff (Retired)
3408 463 991

@11ty If you believe the settings are correct and the system is not charging taxes correctly, then you'll need to contact Shopify Support. They can offer account specific assistance by reviewing your current setup to understand where the issue is. 

Trevor | Community Moderator @ Shopify
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11ty
Visitor
3 0 0

what is the point of this community website if I'm being told to contact Shopify Support, which I already did, multiple times?