Hello,
I am implementing Shopify’s Collective:Supplier to allow retailers to sell our products. I am trying to figure out how to handle collecting taxes on these orders, specifically for orders shipping to CA or MA. I see where Shopify says it calculates based on the retail price for these states, but it appears that they only do that when the retailer or supplier are located in one of those states, not the customer. According to my accountant, the retailer and supplier are not what dictates this, the ship to address (customer address) is. I’m unsure if I’m just not setting this up correctly, or if this is being handled incorrectly on the collective side.
Also, I am trying to use Avalara. I have test orders with Avalara and Shop tax - both yield the same result. With Avalara however, I run into an additional issue. When shipping is charged to a customer in CA through the supplier rates (say the supplier offers flat $10 shipping, which is added to the order, then goes through the retailer to the supplier), the customer is not charged tax on this shipping, but the retailer is? It seems that when calculating tax, avalara is being passed the shipping line as if it was a taxable line item, so it is applying the tax rate to the shipping charge during calculation for collection / checkout. But - when the order is recorded in Avalara, it recognizes that shipping is NOT taxable in CA - so the collected tax mismatches what is recorded in Avalara (calculated tax treats shipping as taxable, recorded tax treats it as not taxable).
So in summary, it appears that Shopify is charging tax based on retail price for the wrong scenario, and it is incorrectly treating a shipping line as a regular line item when calculating tax. Am I doing something to throw this off, or is this genuinely a Shopify issue?
referenced tax calculation doc:
https://help.shopify.com/en/manual/online-sales-channels/shopify-collective/suppliers/taxes