Learn how the engine you run in Shopify affects how tax is collected
Shopify Basic
This is a discontinued offering from Shopify that sets standard tax rates for every state and county. Tax rates are not updated based on product categories and the zip code of the order - it will not apply reduced rates for food in some states, for example. This can lead to very variable tax collection.
Shopify Manual
This option allows the merchant to set their own tax rates for each locality.
Important: Numeral does not provide support for merchants using this option.
We will continue to file your sales tax returns, but we cannot:
Troubleshoot discrepancies between tax collected and tax owed
Assist in entering or verifying manual tax rates
Provide guidance on which rates to set in Shopify
As many states have hundreds of tax jurisdictions, we are unable to offer any support for this setup.
If you need automated support or rate accuracy, we recommend using Shopify’s automatic tax settings instead.
Shopify Tax
Sales tax is collected based on the product category as well as the shipping region. Shopify tax allows for what is called "rooftop accuracy" drilling down to the rooftop level as some homes in the same zip codes may have different tax rates 🧐 -- we know sales tax is complicated, we are excited that Shopify has built such a sophisticated product. We have found that if products are categorized correctly, and Shopify settings are enabled correctly, sales tax collection tends to be pretty spot on 🎯
Learn more about Shopify's different tax engine offerings here.