The result of the Wayfair vs South Dakota ruling fundamentally changed the way sales tax works in the U.S. I was part of an ambitious project to redesign the Sales Tax Collection experience in Shopify.
The redesign aimed to solve a number of problems and usability issues that had manifested over the years and had been exacerbated by the new Wayfair ruling.
I was the lead product designer on this project and led UX from ideation to build.
I worked with a Researcher to conduct primary research, worked with tax experts at Shopify to understand sales tax laws, worked with the Product Manager and marketing teams on the go-to-market strategy and with UX leadership to align on the long term goals and UX strategy for this project.
Prior to the Wayfair ruling, merchants in the U.S. were only required to collect sales tax in states where they had a physical location. In 2018, the U.S. government implemented a new tax law which made it so that merchants also needed to collect and remit sales tax in all states where they had buyers and were doing business.
This meant that most merchants needed to collect and remit sales tax in a lot more states.
Before this redesign, the tax collection experience was based on ZIP codes. Merchants had to manually enter in a ZIP code for every region where they needed to collect sales tax.
With the U.S. having over ~41,000 ZIP codes and with the new ruling in place, merchants were having to manually enter in 1000's of ZIP codes which was a slow and frustrating experience and we were getting a large number of support calls related to tax setup.
Map of the US with all it's tax rates and ZIP codes.
Merchants were forced to translate the map above into a table of ZIP codes.
Before this redesign, the tax collection experience was based on ZIP codes. Merchants had to manually enter in a ZIP code for every region where they needed to collect sales tax.
Since this was a high-priority project on a tight timeline, my immediate gut reaction was to simply make it faster for merchants to enter in these ZIP codes through a CSV.
One of the core things that stood out from research was that our experience did not align with the real-world mental model for sales tax. In the real-world, sales tax was based on states, not ZIP codes.
I mapped out the mental models to help visualize where the disconnect was coming from.
Our key goal was to ensure that the new design aligned with the mental model that merchants had. I also led a workshop to establish design principles that would inform the redesign and act as a compass for the tax product.
The new design went through many iterations before we had a shippable candidate.
Empty state for tax collection.
Adding states where you need to collect sales tax.
State based tax collection.
We launched the Beta in April 2020 to a limited number of merchants in the U.S.
In the first month of launching the Beta, support tickets related to the sales tax setup fell from 37% of all tax related tickets to 21%. The updated experience also improved load time of the website.
This redesign paved the way for new features and functionality and has helped influence the future direction of Sales Tax at Shopify.
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