TCommerce: Sales Tax Solution

Within this ever-changing sales tax landscape, all web platforms like Thinkific are required by law to ensure sales tax is collected and remitted to the relevant tax authority on most US and Canadian sales.

As part of our commitment to compliance–and making your life easier–Thinkific automates tax management for your US and Canadian sales (where tax is applicable) with our new Sales Tax Solution.

This means, you no longer have to worry about managing sales tax on any transactions processed through our platform in the US and Canada. We will calculate, collect, and remit taxes—we’ll handle it all—so you can focus on what you do best: growing your business.

About This Feature

Thinkific will automatically calculate, collect, and remit taxes on all qualifying student purchases made in the United States and Canada for creators on TCommerce: Powered by Thinkific Payments.

New tax laws required by states and provinces in the United States and Canada obligate Thinkific and other web platforms like ours to take on the responsibility of ensuring the collection and remittance of sales tax to the relevant tax authority on behalf of marketplace sellers (in our case, Creators). As a result, Thinkific is required by law to ensure that sales tax is collected and remitted on behalf of our Creators for sales made in these jurisdictions.

The main reason for this requirement is to promote fair competition in the online marketplace and simplify the sales tax collection process for all parties involved including sellers like you. By taking on the responsibility of collecting and remitting sales taxes on your behalf, Thinkific helps ensure compliance with tax regulations and reduces the administrative burden on you, the Creator, so you no longer have to worry about managing sales tax yourself. You can focus instead on growing your business and engaging your students, while we handle sales taxes for you.

In addition to meeting legal requirements, the Sales Taxes solution allows you to:

Save valuable time and energy
Stop spending your valuable time and energy on calculating, claiming, and reporting on sales tax. We'll handle it all so you can get back to creating content and engaging your audience.
Be compliant
Let us handle the scary (and tedious) stuff and ensure your business is not at risk of non-compliance.
Earn more on every sale
Tax will be automatically calculated and added on top of the price you set for your Thinkific products before the sale is processed, so your business no longer absorbs the varying tax costs across jurisdictions.

“I knew I had to figure out taxes and it seemed so complicated so I just kept putting it off, which just made me stress more! Now I literally don't think about it at all! Thinkific does all the work for me and it's one less thing for me to stress about. It's been on my list of stuff to figure out and now it's off my list – I didn't have to do anything, it's just done!”

- Katja Swift, Founder, Commonwealth Herbs

This sales tax feature is mandatory and enabled automatically for all Creators on TCommerce.

How the Sales Tax Feature Works

Sales taxes are calculated and applied on:

All new sales going forward (with or without Order Bumps or Coupons)
All product types (courses, communities, memberships, digital downloads live events, bundles)
All price types (one-time payments, subscriptions, and payment plans)
Transactions made using all TCommerce payment methods (credit card, Digital wallets, Buy Now Pay Later, or any additional payment methods)
Transactions made by students located in the United States and Canada

Sales taxes will not be applied to:

Existing subscriptions and payment plans
Transactions made by students located outside of the United States and Canada
Zero-dollar transactions (free products, free previews, or orders where a 100% off coupon was applied)
Products that are deemed non-taxable, as defined by the jurisdiction in which the sale is made and by the tax category applied to the product.

When a learner purchases a new product on your Thinkific site, they will see an additional tax charge, on top of the price of the product. The tax charge is calculated automatically based on several factors:

Student’s location - as determined by the address information entered by the student during the checkout.
Product tax classification - as determined by the tax category assigned to each product, which can be found in Tax Settings.
Student’s tax exemption status - provided the student has been verified as tax-exempt, no tax will be collected on their purchases. Students can claim a tax exemption by providing proof of their exemption: learn more about it here.

Once the payment is processed, the tax charge will be reflected on the student’s receipt and in the Transactions Report under Tax. Thinkific will withhold this tax amount and will remit it to the appropriate authorities directly. You will receive a payout equal to the price of your product minus any Thinkific Payments fees.

"The implementation of Thinkific's sales tax solution was totally seamless and works incredibly well with my existing payment processing system. The solution automatically calculates the correct amount of sales tax based on our products and customer location. This has eliminated the need for manual tax calculations, which has made our sales process efficient and accurate.”

- James Procter, ExamPrep

Sales Tax Solution Fee

There is a 0.5% fee for every transaction where a tax is calculated, i.e. every non-zero dollar transaction in which the student is located in the United States and Canada. This means that the fee applies even when the system calculates the tax rate as 0% (due to the student’s location, product’s tax category, or student’s exemption status). The fee is based on the total amount paid by your student (including product price and tax).

The fee does not apply to:

Free orders
Transactions where a 100% off coupon was applied
Transactions from students located outside of the United States or Canada.

The Sales Tax solution fee is not refunded to you if you refund a student's transaction.

How can I enable and set up the Sales Tax feature?

The Sales Tax feature is automatically enabled on all TCommerce accounts. To access this sales tax solution as well as other great TCommerce features, enable Thinkific Payments on your account: Thinkific Payments.

Entering Your Tax Registration Number

A tax registration number is a unique identifier issued by your government tax authority to individuals or entities for the purpose of tracking and managing tax obligations.

To enter your tax registration number:

From your Admin Dashboard, select Settings
Select the Tax tab
Click on Enter Tax Registration
Select I am registered for tax or I am not registered for tax
If you are registered for tax, enter your EIN/TIN in the field provided
Click Save Tax Registration

US Businesses: Have trouble verifying your EIN? Check that the account’s company name and EIN match exactly what’s shown on the company’s SS-4 confirmation letter or Letter 147c. Learn more about IRS documentation and TIN.
If you are unable to update your account details or require further assistance, please contact Support.

Selecting Product Tax Categories

If you are unsure what category your products fall under, please contact a tax professional. Our Support team is unable to offer legal or tax advice.

Tax categories are used during checkout to determine whether tax is applicable in the jurisdiction where a student is located and if so, what tax should be collected. The same product tax category can have a different tax rate (or no tax at all), depending on the student’s jurisdiction.

Thinkific will automatically assign a default product tax category to each of your learning products. This applies to any products that already exist as well as any new ones you create.

To ensure that the correct tax is being collected on your sales, you should review and update your product tax categories, if an alternate tax category more accurately describes the product you’re selling. For example, if you’re using a course to sell downloadable content such as worksheets or templates, then Digital Documents may be a more appropriate tax category than an Online Course/Bundle.

To edit your default product tax category settings:

From your Admin Dashboard, select Settings
Select the Tax tab
Under the Tax Categories section, you will see the list of categories to which your products are assigned and the total number of products under each section
To edit a product’s tax category, select Edit Categories
(Optional) Use the search bar to find your product
Select the category that best describes your product

Product Tax Categories

See the list of the product tax categories supported below.

If you are unsure what category your products fall under, please contact a tax professional. Our Support team is unable to offer legal or tax advice.

Category name	Description	Product Examples
Online course/bundle	Assigned as a default to all courses, bundles, or memberships. This tax type is appropriate for self-study web-based training that does not include live lessons.	A standard self-guided course (with no live element or community access) A bundle that includes several self-guided courses A membership that allows students to access self-guided courses
Online course/bundle with live lesson	Web-based training (courses or bundles) that includes live lessons.	A course with a weekly live session A bundle that includes a course with a live session element A membership that includes a live session element
Community access	Assigned as a default to all community products. This tax type is appropriate for any product sold that allows access to an online community or membership, delivered through cloud services software.	A course with a community access A bundle that includes a community access A community
Digital book	Works that are generally recognized in the ordinary and usual sense as books and are transferred electronically.	A book that is sold as a course
Digital school textbook	Works that are generally recognized in the ordinary and usual sense as books that are required as part of a formal academic education program and are transferred electronically.	A textbook that is sold as a course
Audiobook	The recording of a book read aloud.	An audiobook that is sold as a course
Digital Documents	Standalone documents delivered digitally such as workbooks, templates, practice exams, etc.	An “additional resources” course that consists only of documents and worksheets
Digital images	Standalone images or photographs delivered digitally.	A set of images that are sold as a course
Live video stream	An audiovisual work of a live performance streamed over the internet.	A concert livestream that is sold as a course
Physical goods	Any tangible or physical good.	A physical book that is sold as a course
Coaching/Consulting Services	The provision of expertise or strategic advice that is presented for consideration and decision-making.	A course with coaching sessions included

Creator Experience

The collected sales tax amount will be visible in several places in Thinkific.

New Order Notifications

The tax will be reflected in the New Order notification email (if it is enabled).

Transactions Table

The tax collected on each transaction will be visible in the Transaction Report, under the Tax column. The table outlines the total tax collected, as well as the total amount net of any tax and fees, due to be paid to you. The information is also reflected in the Transaction Report export.

Clicking on the transaction will open up a transaction details view where you can see information about the transaction, including the fee and tax breakdown.

Student Receipt View

You can view the detailed breakdown of the tax (e.g. GST/PST portion):

Click on the three dots next to the transaction
Select the View Receipt option

This will open a receipt view detailing the transaction information.

Orders Table

The total tax amount collected for all transactions from an order will be shown on the Order details screen. To access the view:

From your Admin Dashboard, select Sales
Select Orders
Find the order you want to view
Click on the Order ID
The total sales tax amount collected will be listed in the Tax collected by Thinkific row

Sales Taxes and Refunds

For example, a student buys a $100 course and is charged a $6 tax. If you decide to provide a partial refund of 50%, your student will receive 50% of the tax charge as well. In this case, they will receive 50% of a $6 tax charge, i.e. $3.

Student Experience

The student checkout experience will remain largely the same. When a learner purchases a new product on your Thinkific site, they will be prompted to input their email, first and last name, address information, and payment details. Once the address information is entered, the learner will see an additional tax charge, on top of the price of the product, if applicable.

Students will be able to see the tax amount on their Thinkific Order receipt. The receipt will contain the student's location information, the collected tax amount, and Thinkific's tax information.

Additionally, students are able to view their transaction details by doing the following:

While logged in, click on your name
Select My Account
Select Order History
Click on the number of the order you want to review

How can students claim tax exemption?

Your students can claim tax exemption by providing a valid tax exemption certificate/documentation. The verification process will have the following steps:

A student completes a transaction where a tax is calculated
The student provides you with the necessary information (see below)
You start the verification process by sending the student’s information to taxes@thinkific.com. Please also include the URL of the Thinkific account they have purchased on.
Thinkific’s team requests validation and verifies your student’s exemption status via our tax compliance software, Avalara.

Your student will receive an email directly from Avalara with a link to securely provide their tax exemption documentation.
If their status is verified, your student will receive a tax refund, whenever applicable. Taxes will not be applied to any future transactions this student completes on your Thinkific site.

The tax exemption status can only be assigned once at least one transaction is completed by the student. If the tax exemption status is verified, the student will receive the tax refund for the initial transaction, whenever applicable.

To start the verification process, you will need to collect the following information from your student and send it to taxes@thinkific.com:

Student/Organization name: (this needs to align with what is on their tax-exemption document)
Student email:
Country:
Address:
City:
Region(state/province):
Zip/postal code:
Order Number:
URL of the Thinkific site where the order was processed:

Frequently Asked Student Questions

This section contains questions that you might receive from your students regarding the sales tax.

Student: How can I update their location information?

Students can update their location information during the checkout process when purchasing a new product on your site. You can also update the student location information by following these steps:

From your Admin Dashboard, select Users
Select All Users
Find a student, whose location information you want to update
Select the Details tab
Click Edit
Update address information
Click Save

Student: What if I change my location while I have an active subscription?

If your student updates their location information while they have an active subscription, the new tax rate will apply to future payments only. No refund or adjustment will be made for past transactions.

Frequently Asked Questions

Tax Collection and Remittance

Why must sales tax be collected by Thinkific on my sales? Why do you collect tax?

The reason why we are now collecting tax on your sales is that we meet the economic nexus thresholds in all US and Canadian tax jurisdictions.

I am already registered to collect the tax myself. Can Thinkific still do that for me?

Yes, Thinkific will calculate, collect, and remit taxes on your behalf, regardless of whether you are registered to collect taxes yourself or if you have never done this before.

Do I need to register to collect taxes in the United States and Canada?

No, you do not need to register to collect taxes in the United States and Canada, as Thinkific is already registered in all jurisdictions where the Sales tax is collected. Thinkific will be remitting any tax collected on sales made in these jurisdictions, under our registration numbers, as the platform that facilitated these sales. You might need to register to collect taxes in jurisdictions outside of the United States and Canada.

How and when will the tax be remitted? Where can I see this?

The tax amount collected will be withheld by Thinkific (therefore not included in the payout to the Creator) and paid by Thinkific, directly to the applicable Tax Authority.

Taxes get remitted differently, depending on the tax authority. In some jurisdictions, this might be monthly, in others, quarterly, bi-annually, or annually.

We can’t provide you with the actual tax return, because this is Thinkific’s company tax return, but you can see a breakdown of the taxes collected and remitted in your Thinkific admin account. Go to Market and Sell, and click on the Transaction Report.

If you will be reporting a tax return regardless (for example, if you operate in Canada), you would report Total Sales in your tax return, but you would not report/remit any taxes collected on the sales made on TCommerce. You can add a note in your tax return indicating that "sales taxes for transactions made via a platform operator are collected and remitted by the platform". This will clarify to the tax authority why there is a difference between your total sales, and tax remitted.

Why do I have to charge sales tax if I haven’t crossed any nexus (US) or permanent establishment (Canada) thresholds?

For digital goods sold via an online marketplace to students in the US and Canada, the individual sellers' sales volume thresholds no longer apply, the platform’s threshold now applies. This means that even if you haven’t crossed the volume threshold to register, charge and collect sales tax in a particular jurisdiction, Thinkific is still required to charge and collect on your behalf. This is a recent tax rule designed to capture more sales tax as well as take the tax compliance off your hands. You can read more about this in the Creator Sales Tax Guide

Tax Calculation

How is tax determined on my sales?

During the checkout flow, we use the following to determine whether tax is applicable, and if so, what tax must be collected from your students:

The student's location
Determined by the Country and Zip/Postal code information entered by the student during the checkout. This is used by us to identify which tax jurisdiction is involved in this sale and therefore which tax regulations must apply to this sale.
The product tax classifications
Determined by the tax category assigned to each product, which can be found in Tax Settings. This is used by us to understand the tax treatment specific to the product, given the tax jurisdiction involved.
The student's tax exemption status
Provided the student has been verified as tax-exempt, no tax will be collected on their purchases. Students can claim a tax exemption by providing proof of their exemption, learn more about it here.

This is best illustrated through examples. Let’s assume in these examples, you are selling the same product, which is classified as an Online Course/Bundle, to the students listed below:

Student A who's located in Ontario, Canada
In Ontario, online courses are considered taxable and in Ontario, HST is collected on taxable purchases. So the standard 13% HST would be added to this sale during checkout and collected from Student A.
Student B who's located in NY, US
In NY however, online courses are considered non-taxable so no tax would be expected on this sale and therefore, no tax will be added to or collected from Student B when they complete their purchase.
Student C who's located in Oregon, US
In Oregon, sales tax does not apply at all, so no tax will be added to or collected from Student C when they complete their purchase.
Student D who's located in British Columbia, Canada
In British Columbia, online courses are generally considered taxable so PST would be collected on this sale. The federal government of Canada also considers online courses taxable. This means that 5% GST and 7% BC PST would be added to this sale at checkout, and collected from Student D.
Student E who's located in Durham, North Carolina, USA
In North Carolina, online courses are considered taxable and given the student’s location in Durham, a State, County, and District tax will apply. The sum of these three taxes will therefore be collected from Student E when they complete their purchase.

Are there any limitations on which products the tax will be collected?

Tax will be collected on:

All new sales going forward (with or without Order Bumps or Coupons)
All product types (courses, communities, memberships, digital downloads live events, bundles)
All price types (one-time payments, subscriptions, and payment plans)
Transactions made using all TCommerce payment methods (credit card, Digital wallets, Buy Now Pay Later, or any additional payment methods)
Transactions made by students located in the United States and Canada

Sales taxes will not be applied to:

Existing subscriptions and payment plans
Transactions made by students located outside of the United States and Canada
Zero-dollar transactions (free products, free previews, or orders where a 100% off coupon was applied)
Products that are deemed non-taxable, as defined by the jurisdiction in which the sale is made and by the tax category applied to the product.

When a product falls under two or more Product Tax categories, which one should I choose? For example, if I sell a course with live lessons and community access?

If your product falls under two or more categories, consider the bases of the sale when selecting the appropriate category. For example, if your main offering is a course with live lessons (that's the bases) and community access is the add-on, you can select the Online course/bundle with live lesson category. If it is community access (that's the basis) and the live event is the add-on, you can select the Community access category.

This is an example and a suggestion only and not professional tax advice. If you are unsure what category your products fall under, please contact a tax professional. Our Support team is unable to offer legal or tax advice.

Does the tax apply on top of the product price or is the tax charge withdrawn from my product price?

The tax charge is applied on top of the price of the product.

For example: you sell a course for $100 and its product category is Online course/bundle. Your student is located in a state where products marked as Online course/bundle are taxed at 5%. This student's total will be $105, which consists of $100 course price and $5 sales tax.

Note that this is an example only.

If my student uses a coupon, does the tax apply to the price before or after the coupon is used?

Tax is calculated on the final price of the product. This means that if a coupon is applied at checkout, and a discount is awarded, the tax due is calculated after this discount has been applied.

For example, if your student applies a 50% off coupon to the $100 course, the tax will be calculated based on the price of $50 ($100-50%).

Will tax be applied to Paypal transactions?

As orders made through Paypal are processed outside of Thinkific Payments, the tax is not collected on Paypal payments.

Will tax be applied to gift or group order purchases?

Wherever applicable, the tax will apply to gift or group order purchases. The tax will be calculated the same way it is calculated for regular purchases, using the above criteria. The tax will not apply to the gift or seat redemptions, as those are $0 transactions.

I am paying extra to remove the Thinkific label from my products on Thinkific (i.e. whitelabeling) - why does my student receipt say ‘Thinkific’?

As Thinkific is the one collecting and remitting the taxes, we are obligated to disclose this on receipts, along with our GST/HST/QST tax registration numbers.

When I duplicate an existing Course / Bundle, is the product tax category also duplicated?

Yes. When duplicating a course or bundle, the PTC defined for the product being duplicated will also apply to the new duplicate product.

How is the Affiliate or Revenue Partner commission calculated, when tax is collected on a sale?

Affiliate and Revenue partner commission is always calculated on the payment amount, less any tax that might have been added to this. This ensures that commission is not earned on the tax portion of the payment. For example, if a 10% commission is to be earned on a product priced at $100, and $5 in tax is added to this payment, the commission to be paid to the Affiliate or Revenue partner is calculated as 10% of $100.

When I refund a sale, what happens to the tax portion paid by the student, is this also refunded?

When you provide a full or partial refund, the associated tax will be refunded to the student as well. In the case of a full refund, the full tax charge is refunded. In the case of a partial refund, only the proportional amount of the tax charge is refunded.
For example, a student buys a $100 course and is charged a $6 tax. If you decide to provide a partial refund of 50%, your student will receive 50% of the tax charge as well. In this case, they will receive 50% of a $6 tax charge, i.e. $3.

Tax Exemption

Can I opt out of this feature?

No, this tax feature is turned on by default for all TCommerce customers and it is not possible to opt out. New tax rules applicable in the US and Canada require marketplaces to take on the responsibility of collecting and remitting sales tax on behalf of marketplace sellers, who use their platform to sell. This means that as a marketplace seller, you no longer have to worry about collecting and remitting sales tax yourself, on those sales made through the marketplace, which can simplify your operations.

I live in a state with no sales tax, sales tax should not apply to my courses.

The tax is calculated based on the student's location, not the location of the seller. If a student lives in a state with no sales tax or the sales tax does not apply to the product they are purchasing, they will see a tax rate of 0%.

I believe I am tax-exempt because… We are a charity/Not-for-profit/501c3 charity.

In many jurisdictions, purchases that charities/non profits make are sales tax exempt, however sales that charities/non profits make are generally not sales tax exempt. A charity/non profit must generally charge sales tax on its invoices. If you have received tax advice that your business is tax exempt from charging sales tax, GST or VAT, please send us your tax exemption certificate and we will review it. For more information, refer to the Creator Sales Tax Guide. .

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