Overcollecting and Undercollecting

There are a few reasons why TaxJar Reports may tell you you have overcollected or under-collected sales tax from customers.

Tax Exempt Items

The "Should Have Collected" figure you see in the detailed sales tax analysis and the Expected Sales Tax Due amount in your TaxJar local reports is an estimate based on your Gross Sales Total--but this estimate also (at this time) assumes that all of your sales are taxable. This means this report will also suggest you are under-collecting if you are selling a lot of exempt or non-taxable items.

Shipping

If you charge sales tax on shipping in a state where our rules tell us shipping is non-taxable, the report will suggest you are over-collecting, while if you don't tax on shipping and we think it's taxable, the report will suggest you are under-collecting.

Incorrect Product Tax Codes in Amazon

For Amazon sellers, over-collecting can also sometimes be a result of incorrect taxes being applied to the items that are being taxed.

One thing that can cause this in Amazon is applying A_Gen_Tax to all items because it may cause Amazon to collect taxes on those items even in states where that item may not be taxable.

The more accurate your Amazon tax settings and Product Tax Codes, the closer you'll be to collecting the "Should Have Collected" amount. We have tips to help with getting these settings more accurate:

1) We list settings you can mirror to make sure your Amazon Tax Settings are accurate in Seller Central at the end of our Sales Tax Guide for Amazon FBA Sellers. You can also watch our How to Set Up Sales Tax Collection in Amazon Seller Central video.

2) On our blog, we discuss How to Code Your SKUs for Sales Tax in Amazon

3) We also show you How to Change Your Product Tax Codes in Amazon

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