No you are right, this is really a shortcoming of shopify. We were simply not aware of the tax problems in CA and NY when we developed the taxation module.

We are aware of it and will remedy it in a future release.

Is there a way to charge the lowest possible tax for all customers in CA and roll the average damages into the product prices or shipping costs so that no damages occur in the bottom line at the end of the month?

Hi, thanks for the fast response.

I guess your suggestion might be possible, but it’s not for me to say whether that’s an acceptable solution. It certainly doesn’t give much credibility to my claims to my client that Shopify is the greatest thing since the invention of zero if I have to tell them that the solution is to do some kludging with prices.

How quickly do you expect a fix to be ready?

Yeah, this could be a deal-killer for me too. We’re CA-based and 60% of customers are in CA; charging incorrect tax makes us look kinda dim.

As Brandon says, in trying to pitch Shopify as a great solution (which it is, mostly) this gap costs critical credibility points.

I too, need some idea of timeline here…

We can’t comment on future timelines. Sorry to disappoint.

Maybe someone found a better workaround for the time being?

— Last edited 03:06PM, Jul 24, 2007

not to say i told you so :)
but let me refer you to a comment I made just about a year ago

How can there be a workaround?

AFAIK Liquid prevents any access to the backend, and the calculation has to be done on the back end. Unless it’s possible to jerry-rig our calculations in Liquid and then submit them at the end of the checkout process. Can this be done? Can we write the logic in our Liquid templates to say (for instance) if the user’s Zip is in array 775 then add .5% tax, and if their zip is in array 825 then add 1%, with the default for the state being 7.25%? This would be displayed to them the same as if everything was computed on the back end, and it would be submitted and the effect would be the same. (And from the user’s point of view, everything done in Liquid IS on the backend anyway, only from our point of view it’s not quite as far back as we might like to be able to reach sometimes.)

Tobi?

P.S. I kind of understand your resistance to commenting on future timelines, but nonetheless in refusing to give ANY idea of when you’ll fix this you’re essentially saying that our problems (which is to say the problems with your software) don’t matter much to you. It would be good to know: have you settled on an approach to solving it yet? How high, relative to other things planned, is the priority for this?

Don’t mean to hijack your thread, Brandon, but I think the taxation issue needs to be addressed in more general terms, so I’m taking this opportunity.

That whole raging tax discussion died down many months ago, but I am still convinced that shopify will NEVER be able to keep up with all taxation rates worldwide, and shouldn’t even try.

Just to give you a taste: Europe has 4 different rates: super-reduced, reduced, standard, and “parking”.

To illustrate: here are a few selections from the official EU document (pdf):

Germany: standard rate 16%, but 7% on fruits, art objects, books; Austria: regular rate 20% but 16% on food and books, and 12% for wine from farm production carried out by the producing farmer; Belgium: regular rate 21%, but 12% on pharmaceutical products of plant origin, margarine and tires and 6% on food and art; Spain: standard 16%, but 7% on food, flowers, plants, and 4% on books; France: standard 19.6%, except for the overseas territories, 5.5% on books as well as phytoparmaceutical products, but only those recognised by the Ministry of Agriculture, and 2.1% on magazines; Ireland: standard 21%, but 13.5% parking rate for works of art, 4.4% for books, food, flowers, and zero rate for children’s clothes and certain articles of feminine hygiene,as well as wax candles but only if plain, white and undecorated, as well as wheelchairs, crutches and artificial parts of the body, excluding false teeth ; Estonia: regular rate 18%, but magazines 5%, except for those containing mainly commercial or erotic/pornographic content, which are standard rate; Luxemburg: standard rate 15%, but parking rate of 12% for certain wines, and 3% for children’s clothes and footwear; UK: standard rate 17.5% but zero for sheet music: Poland: standard rate 22%, babies clothes 7% (but not older children’s)...and so on and so on, of course taking into account the fact that for VAT purposes, Spain does not include the Canary Islands, whereas for Greece, special rates are applied to the departments of Lesbos, Chios, Samos, etc etc, in Italy, the territories of Livigno and Campione d’Italia are excluded from the scope of VAT, and in Finland, the Aaland island is not part of the European Union, even though Aaland belongs to Finland, and Finland belongs to the EU.

Not to mention that no EU shop should charge any VAT at all when selling to customers outside the EU.

Hmm. Have I said this before?

Don’t mean to hijack your thread, Brandon, but I think the taxation issue needs to be addressed in more general terms, so I’m taking this opportunity.

Hey, feel free to add anything you think is useful: you’ve made lots of useful contributions to the discussions on this forum, so I assume this will be no different (I’m responding before reading the whole thing). Besides, it’s not my thread—it’s everyone’s.

That whole raging tax discussion died down many months ago, but I am still convinced that shopify will NEVER be able to keep up with all taxation rates worldwide, and shouldn’t even try.

Not sure I can agree with you on that one point: if Shopify doesn’t do it, then all of their customers will have to do it individually. It’s much easier and more efficient for one entity to keep track of that, and it’s a valuable service to the customers that makes the software all the more useful. And if they don’t keep track of it, then they can’t make their software able to handle it. Which is exactly the situation that gave rise to this discussion: they didn’t keep track of it, but rather made the same assumptions that most of us who aren’t professional tax accountants, or merchants in the regions in question, would have made, but these assumptions turned out to be wrong—the assumption that tax in California (or New York, or wherever) is uniform throughout the state.

So, although you’ve clearly given this issue a lot of thought, I think I agree with you on all points except whether Shopify should be involved in keeping track of this. I think if they don’t then their store will cease to be practically usable. (For my client it has not yet become usable, although for me, if I were operating a store in Michigan where I live, it would be the first thing I’d look at.)

I think I agree with your earlier posting (if I understand it and remember it correctly) that they need a flexible way to allow a merchant to set any taxation parameters they need to set.

Anyway, I’m open to being proven wrong…

if Shopify doesn’t do it, then all of their customers will have to do it individually.

Not at all! Each shopowner simply has to know which tax rates they have to apply to which goods and which customers – and they have a fiscal obligation to know (and declare) that anyway. So it’s no extra work. All that’s needed from the programming side is a smart interface so that they can enter those values themselves.

For example, I don’t give a hoot about county tax rates in California – all I need to know is if I sell stuff to people in the States, I shouldn’t charge them any tax. Which, with the system as it is, I cannot do. So I have actually advised potential US and Canadian customers NOT to buy from me, and have given them the urls of good equivalent stores in North America, because I think for Americans to pay the hefty EU tax (which they don’t need to pay), plus shipping, and import duties, and then possibly their local tax, is just a hideous waste of their money; and frankly, I don’t want to rip them off.

Another thing I can’t do is sell books on my site (which I would like to), because the tax rate on books is a special one, and shopify doesn’t provide for differential tax rates for different products. So that would just be plain illegal for me.

Similarly, it would be impossible for a Polish store to sell children’s clothes from ages 0 to 15, because the rates are different on baby clothes; an Irish candle shop would have to decide whether to sell coloured candles or plain white ones, but couldn’t do both.

And so on. So the fact that shopify wants to predetermine all the rates actually greatly restricts the options – as you can see in your case, for California.

Plus: taxes go up and down, all the time. So if they really want to monitor that constantly for all countries, they’ll have to hire at least one tax specialist full time.

Or say, well fudge the numbers – do some creative accounting! (which seems to be the solution provided for the time being)

So the way I’m thinking about it is this:

There are basically 4 variables:
1 – Origin (location of shop)
2 – Destination (location of customer)
3 – Product tax rate
4 – Tax included in price or not

I’m sure there must be a way of creating a good workflow that will:

1) let shopowners assign tax classes to different goods (by first defining certain classes in the “taxation” interface, and then, in the product interface, specifying the class each product belongs to – and you could of course have a default where you’d say “all products belong to tax class A, unless specified otherwise”)

2) let shopowners assign different destination classes – for example for California, the default destination class (say 1) would be 7.25%, destination class 2 would be 7.75%, destination class 3 would be 8.25%, and there would be a zip code correspondence for each of these rates (i.e. shopify could indeed have a database for the US specifying the correspondence between zip code ranges and county names). For Europe, there would be 2 destination classes – within the EU and outside the EU.

There are more details & I won’t go into them all, but I think it should be done by good programming, not prior (and erroneous)(over-)determination of legal obligations.

For CA tax, questions consult the State Board of Equalization (BOE) at http://www.boe.ca.gov/sutax/sutprograms.htm.

In speaking with them, they said a merchant has two options in California when collecting sales use tax: 1) collect taxes for all counties and cities at their tax rates or 2)collect the only the State tax for all counties AND for transactions in the customer is in the same county as use collect those taxes too.

If you choose option 1, you need to have a lookup table to those city/county tax rates and keep abreast of any tax changes that may occur. The BOE has told me that a merchant is under no obligation to collect taxes from a county in which their business does not have a physical presence. Option 2, is easy, one only has too keep tracks of tax changes in their county.

All told, it’s highly advisable to consult your local tax board. Unfortunately, over the phone conservations don’t count. It has to be in person.

Best advise: find a great tax attorney.

Just an interesting side note to all this – the reason I stumbled upon this thread, but then found my answer, so thought I’d share (most of you probably already know this) – is that CA tax is only charged if it’s also shipped to a location in CA.

I was confused seeing a friend’s order wasn’t taxed, when I know he lives here (SF, CA, where me & my biz are)... but turns out CA tax is only charged if it’s sold & delivered IN the state.

(1) RETAILERS HAVING ONE PLACE OF BUSINESS. For the purposes of the Transactions (Sales) and Use
Tax Law, if a retailer has only one place of business in this state, all California retail sales of that retailer occur at
that place of business unless the tangible personal property sold is delivered by the retailer or his or her agent to an
out-of-state destination, or to a common carrier for delivery to an out-of-state destination.

Source: http://www.boe.ca.gov/pdf/reg1822.pdf

Just in case anyone else’s mind was being blown around that. ;)

w

To comment on CA sales tax, the above two posters’ comments are correct—my sister used to work for State Board of Equalization—

If you are doing business in California at only one location, your online sales only need to be taxed at the sales tax rate of your county, and that is only for orders shipped to locations in California.

Otherwise there is no sales tax that needs to be charged.

Hi There,
does anyone know if Georgia Tax rates are handled exactly the same way?

I’m doing a shop for a client in Atlanta, but I live in New Zealand and had no idea that there was different tax rates in 1 state(as if shipping/tax wasn’t complicated enough)

Chur

— Last edited 09:43PM, Nov 27, 2007

I believe that Florida’s Sales Tax laws are similar, the rates vary by county…

Has anyone been able to figure out an effective workaround for this? I have a client in SF and the site is built. I just now ran into the tax issue—would love it if there’s a way to work it out. Can you use Webhooks with Google Checkout to ensure the payment is processed accordingly?

The way I see it, we have to charge one rate for folks outside of San Francisco and one rate inside of SF county. Obviously, Shopify doesn’t support this out of the box.

I’d really love some guidance on this issue…I’ll continue to research.

As someone mentioned above, you only charge sales tax for the county in which you are located, regardless of where the customer is in California. If you have multiple locations in multiple counties, you charge sales tax based on the county where each location is.

For a web-based merchant with one physical location, you just charge the sales tax for your county.

Think of how brick-and-mortar retail stores work. You pay sales tax based on the location of the retail store, not based on the county where the customer lives.