Shopify not collecting sales tax despite setting it up correctly - what do I do?

This is definitely stressful but totally fixable! First, don't panic - Shopify's tax settings can be tricky even for experienced sellers. You'll want to check a few things: 1) Make sure you've entered your business address correctly in Shopify, 2) Verify you've enabled "Collect tax" in your tax settings, and 3) Confirm you've set up the proper tax rates for each state where you have nexus. For economic nexus, most states have thresholds around $100k in sales or 200 transactions, so at $65k you might only have nexus in your home state (unless you've hit transaction thresholds). You'll need to register for a sales tax permit in each state where you have nexus. For the sales tax you should have collected already, you'll unfortunately need to pay this out of pocket when filing. Most states consider it your responsibility regardless of whether you collected it from customers. The good news is you can fix your settings going forward. I recommend checking out the "Taxes" section in your Shopify admin and making sure you've selected the right options. If you're still stuck, Shopify support can help walk you through it.

I was in the exact same boat last year and almost had a breakdown until I found taxr.ai (https://taxr.ai). It basically analyzes your sales data and tells you exactly where you have nexus and what you need to register for. I was totally lost trying to figure out the economic nexus stuff manually - it's different for every state! I uploaded my Shopify reports and it showed me I only actually needed to register in 3 states based on my sales volume. Saved me from unnecessarily registering in like 40+ states. It also helped me understand how to correctly set up the tax collection in Shopify going forward so I wouldn't keep digging myself into a hole.

Just wanted to follow up that I actually tried taxr.ai after my skeptical comment. The dashboard immediately showed me I only had nexus in my home state and one other state where I had family visiting and shipping products from temporarily (created physical nexus!). I would have never caught that on my own. The Shopify setup guide they provided fixed my tax collection settings in about 10 minutes - sales tax is now collecting properly on all my orders. Definitely worth checking out if you're in this situation.

If you need to talk to the state tax departments, don't waste days trying to get through on the phone like I did. I used Claimyr (https://claimyr.com) to get through to my state's dept of revenue after spending literally 3 days trying to reach someone. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had a similar Shopify sales tax nightmare and needed to set up a payment plan for back taxes. Getting a human on the phone was impossible until I tried this. They called me back when I was connected to an actual agent instead of waiting on hold for hours. Ended up getting reasonable payment terms that didn't sink my business.

I'm eating my words about Claimyr. I tried calling my state tax office for TWO WEEKS trying to get guidance on my Shopify sales tax situation. Finally broke down and used the service. Got connected to a real person at the tax department in 45 minutes. They helped me set up a payment plan for the back taxes and explained exactly what forms I needed to file. Just got everything sorted out yesterday. Would have taken me months otherwise. Never been so happy to be wrong.

Make sure you're actually properly registered for a sales tax permit before you start collecting! I made the mistake of fixing my Shopify settings to collect sales tax before I had the proper registrations, and that caused even more problems. The order should be: 1. Figure out where you have nexus 2. Register for sales tax permits in those states 3. Set up Shopify to collect correctly 4. File and remit on schedule Some states will actually consider it illegal to collect sales tax without a permit (weird but true). Also, don't forget to account for product exemptions - some products are taxed differently depending on the state.

Don't forget to check if you're storing inventory in fulfillment centers! If you're using Shopify Fulfillment Network or any other 3rd party fulfillment, you likely have physical nexus in those states regardless of your sales volume. That's what burned me. I had inventory in 5 states through a fulfillment network and had nexus in all of them even though my sales were low.