Not charging taxes to everyone

duplex
New Member
1 0 0

Hello!

 

I have set up collect sales taxes in NY state (NYC in particular so 8.875%) and the taxes are being calculated at the checkout but not collected by sShopify.

Clearly I am having to pay taxes I never collected.

 

I have reached out to Shopify Support however it seems impossible to get a proper answer so far?

 

Any input?

 

Thank you

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PTex
New Member
1 0 0

Hello:

 

I'm having a similar issue and understand about only charging taxes where you have a physical location (Nexus) but how to you pass on that tax to the customer as it reflects the tax, holds it back from the deposit but doesn't add to check-out.  How can that be done?

 

Thanks..

 

PT

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GBOutdoors
Tourist
5 0 0

Yes, I have the same question.  Do I file sales taxes for all items sold if in Texas or just items sold in Texas?

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allison_wilcox
Tourist
9 0 15
Just items sold in Texas ;-) If it's shipped out of state the system
shouldn't charge sales tax. That changes if your sales are over some
ridiculous number like a million dollars or something (think Amazon) but
for most of us, just charge sales tax on Texas sales.
tax_pro
Excursionist
20 0 24

Hi allison,

It sounds like you're comment regarding "sales over some ridiculous number like a million dollars or something..." is referring to economic nexus laws so I'd like to provide a little clarification.  Please understand my intent is to help business owners become informed about various aspects of sales tax rules across the states so that they may then make informed business decisions about their sales tax obligations and responsibilities.  

  • These laws began being implemented in June 2018 by various states and currently all of the 45 states that have a sales tax except Florida, Kansas and Missouri have implemented an economic nexus law.  (The 5 states that do not have a sales tax are New Hampshire, Oregon, Montana, Alaska and Delaware however many cities in Alaska have implemented a city sales tax)
  • The economic nexus laws include a provision for a "small seller exception" or threshold to exclude those sellers from being required to register for a sales tax license and collect and remit sales tax in that state. 
  • This small seller exception is defined by a $ amount of sales and/or number of transactions that are calculated within either a calendar year period (for most states) or the previous 12 month period
  • Most states have settled on $100,000 of sales OR 200 transactions. However some have only a $ threshold like California which is $500,000 while a few others have a threshold of both $ and transactions like New York which is $500,000 and 100 transactions

As you can see by the last bullet point it is possible for a business to have a registration, collection and filing requirement in a state with sales of much less than $100,000 simply because they made over 200 transactions in the state.  I also recognize that the risk to the business owner for not registering may be much less than the administrative costs incurred by the business to register, collect and report a given state's sales tax. This would need to be taken into account by the business owner along with their risk for being located by a given state where they may have established economic nexus, meaning they have exceeded the small seller exception.

 

Hope you find this explanation helpful as well as anyone else reviewing it in the future.

 

Regards,

Kdriskell88
New Member
1 0 0
Hello!

I just wanted to clarify for myself since I’m new to this thread. I do not have a brick and mortar and I run my entire business online. My sales are under $50,000/year since I am a small business. I currently am in Michigan and I charge MI sales tax for those purchases made online from people within my state. Obviously shopify doesn’t charge tax for my products when out of state purchases are made.
Do I even need to be taxing my items at all? Even within Michigan? From what I am understanding, because my business is all online and so small, I do not need to tax my items. I just wanted to check!
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tax_pro
Excursionist
20 0 24
Hi Kdriskell88
Your business still has nexus (a physical presence) within Michigan because that is where you as the owner of the business reside. Therefore the business is required to be registered for sales tax in Michigan.
Also the sales volume is irrelevant since physical nexus had been established.
Hope you find this helpful
DowningHouse
Tourist
8 0 1

I am in Missouri and this tax thing has fought me every step of the way regarding setup. I work from home and all sales are online. If I am understanding correctly, I will only charge sales tax to Missouri customers. All customers from states other than Missouri will not be charged sales tax nor will I include their sales on my Missouri Sales Tax form that I submit and pay. Am I correct in my understanding?  Also - Shopify is automatically charging city sales tax, however, I do not have to collect for my city as my physical residence/business is not in the city/unincorporated land. How can I not have the city tax in there? Thanks for any insight!

 

Rossann

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tax_pro
Excursionist
20 0 24

Hi Rossann,

 

Yes your understanding is correct.  As far as Shopify including the city sales tax I think that is because they are using the highest rate for your zip code so I'm speculating that part of the zip code boundary is inside the city and part is outside.  In order to exclude the city rate you'll need to setup a tax override for the entire state of Missouri since I'm assuming that you will be reporting all Missouri sales at the same rate correct?  

If you need help setting up override start with this link - https://help.shopify.com/en/manual/taxes/tax-overrides?utm_source=gurucopy&utm_medium=link&utm_campa... - and then go down to this section - Override the taxes on a collection or on shipping charges.  Lastly I suggest you initiate a test transaction from your website to confirm that the rate you want to be charged is now the rate that Shopify is applying.

 

In regard to whether or not you have a requirement to register and collect sales tax for another state did you happen to see my earlier comments concerning "economic nexus"? If you'd like to discuss that subject further please call me 713-858-0085.  Reason is so that I can help you make an informed business decision for not registering in a state where you may have met their requirement to register under their economic nexus laws.

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DowningHouse
Tourist
8 0 1

So...how do I set up a tax override for the state of Missouri? I need someone to explain it to me as if I am 6. I have a doctorate degree and cannot figure out how to make this durn thing calculate the shipping correctly. I put in an override for Missouri [under shipping] of 5.6%, which is the state and county tax I should collect. It is still collecting too much. 

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