Why isn't my online store collecting out-of-state taxes?

etmaine62
Visitor
1 0 0

I have an online store in Arkansas and when I sell things in Arkansas, it will calculate the taxes but every order I have had out of state, it is not collecting taxes. When I spoke to someone, they said I needed to go back and add the check mark "include tax in prices" (which when I read that, I'm not sure I understand it), that did not work.  I feel like I am missing something.  Can anyone help me with this issue?  I see there has been issues with this in the past with others and just wondering if they finally got answers that actually worked.  

 

With that said, I have read that each state has a Nexus limit.  If, I understand this correctly once you've reached a certain amount of transactions in that state, then you are required to report taxes for that state. Could this be why it's not collecting taxes?  Does this keep up with the Nexus for each state?  I just need to know what I am doing wrong, because this is effecting my profits.   Thank you in advance!

Replies 2 (2)

Rostislav
Shopify Partner
190 12 29

Hi,

Your situation has nothing to do with the economic nexus. You actually has to divide the two things - your store settings for collection of sales tax in particular states and the existence of nexus in these states.   

 

Rostislav_0-1676842548488.png

 

 You can set the collection of taxes for every state  in the taxes and duties section. For that you have to be registered for sales tax. But, technically you do not have to be registered in every state (and you do not have to collect taxes in every state) since you may not have a nexus  in every single state. Whether you have or not the nexus depends on the state rules based on a number of sales to that state or the volume of sales. And the rules  differ from state to state. 

 

I will not go deeper into the sales tax rules  - you can find a lot on the subject , try Zonos for example.  

 

 And you may want to switch of " Include tax in prices" it is not very common to price goods like that in USA. 

www.easproject.com - the best EU and UK VAT compliance solution.

weintegrate
Shopify Partner
9 0 0

Hi - you can check out this article from QuickBooks Online regarding Physical and Economic nexus, but in general yes... when you don't have a physical presence in a state you may not initially have to pay taxes until a revenue/volume threshold is met (note that each state has their own rules).  I would also recommend speaking to your accountant and defer to their guidance.

 

https://quickbooks.intuit.com/r/taxes/nexus-guide/