How is Sales Tax Collection Determined?
Shopify Basic: If you have products that have special tax rates or specific rules for tax collection such as food, supplements, or apparel, we do not recommend using Shopify basic. Shopify basic sets standard tax rates for every state and county. Tax rates are not updated automatically based on product categories and the zip code of the order. This can lead to very variable tax collection -- should you notice that basic tax is significantly over or under collecting, please reach out to our support team at help@numeralhq.com or read up on basic tax here
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 🎯
WooCommerce: Rates are uploaded for each zipcode. If you notice under or over collections, reach out to our support team at help@numeralhq.com
What is a reasonable delta to expect for sales tax collection?
While we find that each tax engine is very powerful, especially Shopify tax, we find that there are usually slight discrepancies between what is collected and what is owed.
When our team files, we report to the state your taxable sales at a state level and county level basis. The state comes back to us with how much tax is owed based on the information provided.
If there are large deltas between what is owed and what is collected (greater than 5% delta) our team will do a deep dive into your Shopify store. We strive to get your tax collected as close to tax due as possible but know that small discrepancies are normal.