If you’ve been relying on Shopify to file your sales tax returns, you’ll want to pay attention. Shopify is ending automated filing in Shopify Tax. It’ll file returns for sales made through December 31, 2026, and that’s it. Starting with your January 1 sales, filing returns and paying the states is back on you.
Shopify Tax isn’t going away. It’ll still calculate tax at checkout and keep your tax reports up to date at no extra cost, so nothing changes for your customers. What’s ending is the part where Shopify took that tax, filed your returns, and paid the states for you.
Shopify will still file your final 2026 returns, and for most stores those are due in January. If you file monthly, your first return on your own is for January, due in February. Quarterly filers have until April. New York quarterly filers are on a slightly different schedule, since Shopify’s last return there runs through February.
You don’t need to turn anything off. Automated filing stops on its own after your last return.
If you never used automated filing, nothing changes for you. You’ve already been responsible for filing all along.
Who Files Now?
You can file yourself, or you can pay a service to do it.
Filing yourself is manageable if you’re registered in one or two states. If you’re filing monthly in several states, each with its own website, rules, and deadlines, it gets old fast.
If you’d rather hand it off, the two names that have been doing this the longest are Avalara and TaxJar. Both were handling sales tax for online stores long before Shopify got into the filing business.
- Avalara has been around since 2004 and is built for stores with large catalogs, wholesale accounts, multiple sales channels, ERP and accounting integrations, it handles all of it. Pricing is usually based on volume, so it can be more than a smaller store needs.
- TaxJar launched in 2013 as a simpler option smaller online stores, and Stripe bought it in 2021. Its AutoFile feature handles filing in most states, and it’s a good fit if you want filing automated but still want to see what’s going on.
There are dozens of other sales tax services out there now, and you’ve probably already gotten emails from a few of them. Avalara and TaxJar are the two we know best. We have merchants using both on Turbify, Shopify, and BigCommerce, so we know how they work and where setups tend to go wrong.
Whichever service you look at, ask whether they handle state registrations, whether they’ll respond to state notices for you, whether they cover penalties caused by their own mistakes, and how they handle your Shop app orders. If they don’t have a clear answer on that last one, keep looking.
What to Do Before January 1, 2027
- Download your filing records. In your Shopify admin, go to Finance > Tax filing, open each return, and click Return report. They’re only available until April 30, 2027.
- Check your registrations. Under Settings > Taxes and duties, make sure the states you’re collecting in match the states you’re actually registered in. They don’t always.
- Review your nexus. Most states set the threshold at $100,000 in sales. A strong fourth quarter can put you over in a state you weren’t watching.
- Decide between DIY and a service. Be realistic about how much time you’ll have for this every month.
- Get set up early. Some states require a power of attorney or login access before a service can file for you, and that can take a while.
- Keep the tax money separate. Collected sales tax isn’t revenue. Put it in its own account so it’s there when returns are due.
What Happens If You Skip Filing?
Well, that’s certainly not a good idea.
Shopify is still charging your customers sales tax at checkout, so you’re still collecting it. Collecting it and not paying it in is treated much more seriously than simply not knowing you owed it.
The states also already know about you. If Shopify was filing for you, you’re registered, and each state expects a return every period. Miss one and you can expect late filing penalties, late payment penalties, and interest. Many states penalize missed returns even when you owed nothing. Some will estimate what you owe and bill you for it, and those estimates are rarely in your favor. Keep missing returns and you risk losing your sales tax permit or getting audited. In many states, owners can also be held personally liable for unpaid sales tax, so your LLC won’t necessarily protect you.
Miss one month in five states and you’ve got five separate problems to clean up. Filing on time is a lot cheaper.
What About Sales Made in the Shop App?
Here’s where a lot of confusion exists, so it’s important to discuss how Shop App sales differ from sales through your website. Since January 1, 2025, Shopify has acted as a marketplace facilitator for orders placed through the Shop app, the same way Amazon and Etsy do. For Shop app orders shipping within the U.S., Shopify collects, remits, and files the sales tax, regardless of your tax settings or whether you have nexus in that state. That covers every state with a statewide sales tax, plus D.C. None of this is changing.
However, those orders still matter for your own filings, though:
- Don’t pay the tax twice. Shopify already remitted it, so make sure those sales aren’t reported as taxable on your returns.
- Some states still want them reported. Several require you to include marketplace sales on your return and then deduct them.
- They can count toward nexus. Many states include marketplace sales when deciding whether you’ve hit their threshold, so strong Shop app sales could create a filing obligation for your regular web store orders.
To tell them apart, check the sales channel on the order. If it says “Shop,” Shopify handled the tax.
The important thing store owners who have let Shopify file and pay their sales tax need to is either plan on filing on their own, or choose and configure a 3rd party app before January 1, 2027. Like I mentioned, it’s also a good idea to download your past records before they disappear on April 30th.
This article is for general information only and isn’t tax or legal advice. Sales tax rules vary by state and change often, so check with a qualified tax professional about your specific situation.
Scott Sanfilippo began his eCommerce journey in 1994 by co-founding one of the Internet’s first online retailers, TheFerretStore.com, which was acquired by PetCo in 2006. In 2001, he co-founded the eCommerce design and marketing firm Solid Cactus, which was acquired by web.com in 2009. Today, Scott is the General Manager of Your Store Wizards and lives in Delray Beach, FL. Scott can be contacted at scott@yourstorewizards.com.