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Ray De Varona

Ray De Varona

4 years ago

Hi Mark,

I’m ashamed to say that I thoroughly enjoyed this article. Can you explain what the sales tax requirements would be for ecommerce vendors that have no nexus in a state, but whose orders are all drop-shipped from manufacturers that do have nexus in that state?

Thanks!

Mark Faggiano

Mark Faggiano

4 years ago

C’mon Ray! Nothing to be ashamed of.

Drop shipping is it’s own special breed of fun. A lot of it is very personal to your specific case so I highly encourage you to speak with a nexus expert. Here’s a post that talks about drop shipping at a high level: http://blog.taxjar.com/drop-shipping-sales-tax/

Hope that helps!

Jack Phillips

Jack Phillips

4 years ago

Just goes to show what a mess the US system is due to our origins as separate countries. I’m lucky in that Virginia is fairly straightforward.

Andy Geldman

Andy Geldman

4 years ago

I thought that but as a Brit didn’t like to say… for the United States you aren’t very United!

Jack Phillips

Jack Phillips

4 years ago

True Andy. Of course, Our taxes our still less than the UK .

Camila Rainer

Camila Rainer

4 years ago

Practical comments – I Appreciate the insight . Does someone know if my business could get access to a blank 2015 FL DoR DR-15 version to type on?

Jack

Jack

4 years ago

I assume that is a local tax form. Your state’s website should have blank forms you can print.

Mary

Mary

4 years ago

I have an online store and use paypal. But I live in Oklahoma which is a destination state. Paypal requires tax rate set up by state or zip code. Since tax is calculated according to delivery of product, I attempted to enter all the zip codes and varying rates. However, I hit a snag once I discovered that some zip codes cross county lines creating different rates for the same zip.
My question is this…is there a payment gateway that is more compatible with destination based sales tax rates other than paypal?
Thank you for your response.

Jenn @ TaxJar

Jenn @ TaxJar

4 years ago

Hi Mary,

Unfortunately, PayPal isn’t very helpful when it comes to sales tax. This blog post details some ways that eBay sellers (who use PayPal) get around it: http://blog.taxjar.com/sales-tax-on-ebay/ But I understand this isn’t ideal.

If you have access to developer resources TaxJar’s API is the way to go. You can find out more about it here: http://www.taxjar.com/smartcalcs. Other than that, I’d be interested in hearing from others of any other payment gateways that are more flexible when it comes to sales tax.

Sarah

Sarah

3 years ago

Hi Mark, very interesting article…! The “tax topic” seems a quite complex one in US. I have a question for you, if you can help me: we are a European company which have just opened a branch in Stamford (Ct) to sell our product (interior stairs) throughout US. We about to open an e-commerce but we are not sure about the “tax policy”: do we need to include it in the retail price? How much would it be? In Europe is quite simple: you just consider the VAT of the producer…so if you are French, you can sell in Spain using the French VAt…how we should proceed?

Mark Faggiano

Mark Faggiano

3 years ago

Hi Sarah,

Congrats on the growth of your business! In the U.S., the individual states govern sales tax. If you have sales tax nexus in a state, then you need to register for a sales tax permit and collect sales tax from buyers in that state. I recommend you check out these further resources:

http://www.taxjar.com/guides/intro-to-sales-tax/

http://blog.taxjar.com/international-sellers-deal-sales-tax-u-s/

Also, Sylvia Dion – http://www.sylviadioncpa.com – is a sales tax specialist who focuses on international businesses. If you need help, I highly recommend her.

abbi

abbi

3 years ago

Hi Mark,

I’ve recently opened my small online business in Texas. I have an online store (on shopify platform which auto calculates texas tax rates) and I was told I only have to collect sales tax from purchases within Texas and not any other state. That seems odd to me, but would like your thoughts?

I recently received an online order from a buyer in NY and no taxes were applied to his order by Shopify, but for any Texas based purchases it does apply taxes.

(I am an Australian based in the US now and the taxes here are super complex!)

thanks
Abbi

Mark Faggiano

Mark Faggiano

3 years ago

Hi Abbi – that all sounds correct. You’re “only” required to collect the tax when you have nexus in the state where the item is shipped. You have nexus in TX, so you need to collect. If you don’t have nexus anywhere else, then you do not need to collect in any other state.

Jenny

Jenny

3 years ago

Thanks, Mark! So if an online retailer in an origin-based state (e.g. Utah) sells to an out-of-state internet customer in a destination-based state (e.g. MA), is it the Utah rate that applies, regardless of whether or not the retailer has nexus in MA? (Though in this particular case, the retailer DOES have nexus in MA).

Mark Faggiano

Mark Faggiano

3 years ago

Hi Jenny, It’s a little different that you describe. You only need to charge sales tax in states where you have sales tax nexus, and if you do have nexus in a state then you charge the sales tax rate based on the buyer’s ship to address in that state. (This is even if that state were an origin-based state for in-state sellers. Yes it’s confusing!) We cover it in more detail here: http://blog.taxjar.com/charging-sales-tax-rates/

Terri

Terri

3 years ago

Do I need to apply for a sales tax license if our out of state sales representatives only sell to retailer with their own sales tax certificates? We collect the certificates to prove we did not need to collect the sales tax, but are they valid for us if we do not have our own license in each state? It seems ridiculous to pay for a keep up on a license that we would never collect sales tax on. It would almost be better to drop all our independent sales reps.

Mark Faggiano

Mark Faggiano

3 years ago

Hi Terri,

I can’t counsel you specifically, but the two general rules are that you only need to apply for sales tax in states where you have sales tax nexus AND are selling taxable products. If you aren’t selling taxable products, then you won’t be required to register for a sales tax permit. That said, there may be more factors you aren’t taking into consideration, so I recommend that you consultant a sales tax specialist. We have a vetted list here: http://www.taxjar.com/sales-tax-accountant-directory/ I hope this points you in the right direction!

Anna

Anna

3 years ago

Hi Mark,
I hope you could clarify this issue for me. Each time I call the Sales tax departments in a different state I get different answers.
We are a CA corporation that acquired another company that has a manufacturing facility in Mexico. We hired a logistic company in El Paso to take care of all the vendors shipments and the paper work that is required to bring the items across the border.
We are not present in El Paso. Our vendors ship our purchases to the logistic company or straight to Mexico.
It is clear that inventory and manufacturing supplies would be exempt from the sales tax. What about day to day items that are not used during the manufacturing process or capital items, do we still have to pay the sales tax? Or can we dispute the charge? What can I refer to?
Thanks in advance for your help.

Jennifer Dunn

Jennifer Dunn

3 years ago

Hi Anna,

Jenn from TaxJar here. You have a complicated issue on your hands, and while I can’t give you a determination on product taxability, but I can recommend Peisner & Johnson (www.peisnerjohnson.com). They specialize in sales tax and can also assist in international issues. I really hope this points you in the right direction.

Max

Max

3 years ago

Hi Marc, we are a European company providing online dating services. We are currently looking to expandi our services to the US market but still operate to 100% from Europe. Do we need to charge sales tax?

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