Important tax changes for Shopify sellers using the Shop app effective January 2025

What’s changing?

As of January 1, 2025, the Shop channel (also known as the  Shop app) began automatically collecting and remitting taxes for all orders made on the Shop app and shipped within or to the US. The Shop channel collects taxes on orders in all states (including the District of Columbia) that administer statewide sales tax, as well as Alaska local sales tax. You can read more about the change here. 

Orders placed using Shop Pay from online stores are excluded from these tax calculations. This only applies to orders placed on Shop app. This means that orders placed through your normal Shopify sales channel, even when paid with Shop Pay, aren't treated as marketplace sales.

Frequently asked questions: 

Can you confirm if TaxJar supports importing Shopify marketplace transactions as marketplace sales to users' accounts?

Yes, we support importing Shopify Marketplace transactions as marketplace exempt sales to users' accounts. Note that not all Shopify transactions or transactions paid for using Shop Pay are marketplace exempt, only the Shop App transactions where Shopify informs us they are marketplace exempt. This means if you use TaxJar's reports to file sales tax manually, you will not be double-paying sales tax since we will mark those transactions as marketplace exempt. 

Do I still need to file returns if Shopify is collecting on my behalf?

Shopify is not filing a return on your behalf, even though they are collecting and remitting taxes on your behalf. Many states still require you to have a valid sales tax permit and file your own tax returns. You can read more about this on our blog.

Can I still AutoFile my sales tax returns with TaxJar?

• Yes, your Expected Sales Tax Report takes into account that Shopify has remitted the sales tax for Shop App transactions. Those transactions are considered marketplace exempt and will be displayed as such on your report. 
• AutoFile files based on the Expected Sales Tax Report and will file your sales tax return in compliance with how the state expects to see it.
• Please note: You will not be double-paying sales tax when you're enrolled in AutoFile.

Should I cancel AutoFile?

Although Shopify is automatically collecting and remitting sales tax on your Shop App sales, they will not file a return to specifically report the sales tax that they collected on your behalf. We recommend that you consult with a tax professional to confirm your filing obligations in each state. If you confirm you still have filing obligations in a state, AutoFile can automate filing the returns.