Sales Tax 101

When Online Sellers Should Collect Sales Tax

by Mark Faggiano

When Online Sellers Collect Sales Tax
If you sell stuff online on websites like Etsy, eBay or Amazon, no doubt you’ve wondered when you’re supposed to collect sales tax. Customers ask us all the time if they should be charging everyone sales tax or just customers in their state.

The key to knowing when to collect sales tax from your customers can be boiled down to one word: nexus.

Nexus is a fancy word for “a presence in a state significant enough that you need to collect sales tax in that state.” In other words, if you have a nexus in a state then you are supposed to collect sales tax from customers in that state.

Let’s go through a few of the most common examples to help you better understand when you need to collect sales tax:

Where you live and/or operate your business is nexus

This is probably the simplest example. Let’s say you live in Dallas and you sell stuff on eBay from your home. That’s considered home-state nexus. The state of Texas wants you to collect sales tax from customers in Texas.

Where you have a warehouse is nexus

Let’s say you live in Dallas but business is going so well that you have a warehouse in California so you can ship to your West Coast customers a little faster. That warehouse is a nexus. California wants you to collect sales tax from customers you sell to in California.

Amazon FBA creates nexus

Let’s take the previous example further. Let’s say you sell stuff online using Amazon’s FBA program to fulfill your orders. By sending your inventory to Amazon you’re essentially adding potential nexus to a whole bunch of states. If you’re in Dallas and sell to someone in Ohio and Amazon ships to that person from one of it’s Ohio facilities then you are supposed to collect sales tax from that customer. I talk about sales tax rates in another blog post.

Keep in mind that in this great country of ours every state does have it’s own set of sales tax rules, so the above examples are a general set of guidelines. Check out this page for more about sales tax in a specific state.

So From Which Customers Do You Collect Sales Tax?

Long story short, if you have sales tax nexus in a state, then collect sales tax from all customers in that state, no matter what platform you sell on.

Related Links

Sales Tax Nexus: Defined

Origin v. Destination-Based Sales Tax States

Sales Tax 101 for Online Sellers

If you have any other questions, start the conversation in the comment section below.

  • Stacy

    We have a business in CA. We ship all over the U.S. How do we know what tax to collect inside our state and shipping outside the state. I assumed that outside the state would not need sales tax collected but need to know for sure. P.S…. all of our shipments leave from CA

    • Hi Stacy-

      For sales in-state the state says to collect the local rate for any sales to the district your business is located in. Outside your district the state says to collect at least the state sales tax rate. If you want to collect the local rate (determined by where the item is being shipped) then you can do that as a favor to the buyer. Here’s the full CA post we wrote earlier: http://taxjar.wpengine.com/sales-tax-for-california/

      If you have any questions about nexus issue outside the state of CA, I highly recommend speaking with a nexus expert like Sylvia Dion: http://www.sylviadioncpa.com/

  • Kawtar

    I am planing to start selling online and have a website. I will be operating from home only. Do i have to charge sales taxes to NC residents?

    • Without knowing your complete situation it’s hard to say…the other very common way you could gain nexus with other states is if you use a third-party fulfillment service that stores your inventory in other states….if it’s just you running your business from your house then, yes, make sure you collect sales tax on in-state sales.

  • Jamie

    We do FBA sales (this is our first year) Does Amazon make sure to fulfill orders from out of customer state fulfillment centers? If not how do I check what fulfillment center they were shipped from for each order. I cannot find this information anywhere. Help please taxes are due Jan 20th. Thanks!!!

    • Great question. There’s no easy way track exactly what happens to your inventory, which is why a lot of sellers decide to comply in all of the states that have warehouses. I haven’t personally heard of cases where AMZN places items in warehouses other than the ones listed.

  • halle

    I have an online business and I have no merchandise but I do have a business address in CA. All my items are drop shipped so I have no inventory on hand. Do I still need to collect sales tax from CA orders?

  • Your question is one we hear quite often; where do we have a
    responsibility to collect and remit sales tax. The answer is twofold. You need
    to collect and remit tax wherever you have nexus and what you sell is taxable. In
    regards to taxes, nexus is defined as the minimum link or connection you must
    have with a state before the state can force you to collect or pay its taxes.
    When it comes to sales tax the current law of the land is that this link
    (nexus) must have a physical element to it. However, physical does not just
    mean having a location in a state. It also includes the activities of employees
    and in many instances even third parties. Some common nexus creating activities
    are: having inventory in a state, having employees living in a state or even
    traveling into a state for business purposes and independent contractors or
    sub-contractors representing you or performing work for you in a state they
    live or travel into. These are three broad general categories, there are more
    and there will be variations as to what causes nexus amongst the different
    states.

    I am glad you mentioned drop shipping because this is an
    activity that in some instances can create nexus or at least an obligation to
    pay tax in certain circumstances.. California is one of these states. Let’s say
    your business is located totally outside of CA. You have no connection at all
    except your drop shipper is located in CA. In this instance, whenever your drop
    shipper ships to a CA customer they must either charge you sales tax or collect
    a resale certificate. In CA the only resale certificate that is valid is the CA
    certificate with a valid sales tax number. In other words you must register
    with CA to collect sales tax in order to avoid paying the sales tax to your
    drop shipper. Once registered, you would issue a resale certificate to your
    drop shipper and charge and collect the sales tax from your customer. Once
    collected you would file a sales tax return with CA and remit the tax collected.
    CA has a quarterly filing period. There are about 10 or so states that have
    rules like this. In most states you can simply provide your home state
    certificate or a state specific certificate with a no nexus statement.

    In your particular instance, we do not have enough facts to
    tell you whether or not you have nexus. However, we assume that since you have
    an address in CA you have some sort of physical presence there. Having
    inventory is not a requirement for nexus but rather just one of many activities
    that can create nexus. If what you sell is taxable the state would probably
    assert you have nexus. We usually recommend that companies take the conservative
    route because if you don’t register there is no statute of limitations. In
    other words a state in theory could go back to the day you started doing
    business when or if they find you. In practice they routinely go back 7-10 years.
    To make matters worse the tax, which your customer would have paid at the point
    of sale, is now coming out of your pocket in a lump sum for multiple years with
    penalties and interest added. We call this the greatest tragedy in sales tax.

  • TheMeanBean

    Ebay has implemented a new “valet” consignment service that is operating out of Indiana and Georgia. Ebay states that the valet is a 3rd party business called SellForMe and is not directly linked to ebay, just operating under the umbrella. SellForMe operates out of a business called ModusLink in Indiana and a different corporation in Georgia. These are not ebay owned companies. In their terms of service, they claim they are charging sales tax to 18 different states. Many of the out of state buyers leaving negative feedback for the valet are claiming this is illegal. Unless you read their terms of service, you are not aware that you will get nailed with the tax until after you won the auction.

    This question has been rolling around the ebay message board for quite a while now and I am hoping someone can shed some light on whether this is legal or not.

  • Judy

    Hi Michael,

    Thank you for posting this. very helpful. But what I still am searching for is, my online store is based at my own home in Miami Fl, if I sell to a customer outside of Florida, do I collect taxes? And at what rate?
    Please advise. Thanks

    • Hi Judy,

      You only charge sales tax on sales made into a state in which you have a connection (nexus). Sales by themselves do not create a connection (nexus). You live in FL so you have a connection there and as a general rule should be registered in FL and collecting sales tax only on your sales shipped to customers in FL. If you had connections (nexus) with other states than you would generally want to become registered and collect sales tax on shipments into those states also. You would not charge FL tax but the tax of the state where the shipment was made to. Two activities that can create a connection for online sellers include, but are not limited to, using a third party for fulfilment services and in some cases using a drop shipper. If you do not have any connections (nexus) then you would not charge any state’s tax for sales shipped to customers outside of FL. I hope this helps. If you are unsure if you have other activities in other states. feel free to give me a call. My direct line is 972-277-4820.

  • fmkatz

    All interesting, and scary. But, am I worrying too much?

    How much inventory do I need warehoused in a state to acquire a nexus, or “substantial nexus”? I’m a new – and very small time – seller and likely to have under $10K inventory in FBA over the year, much less in any state.

    For some states, I’ve read that “substantial” means $50K or $100K. Does it ever get down to $10K? Is there any place to find out?

    Thanks

    • States don’t do a great job of indicating a definitive threshold. Most of them say once you have a single item stored in their state then you’re required to comply with their sales tax laws. Is it realistic to think they will come after a business with a few items being stored in their state? Because this can be a gray area, it’s really up to you to determine at what point you’re going to comply. The general rule of thumb I hear from sellers and tax professionals is the more sales you do in a state the more reasonable it is to expect you will comply with their laws.

  • Carolyn

    A friend of mine in Japan purchased a wedding dress on the website Oncewed.com from a seller in Indiana. The USPS Express Mail charge including insurance was $79.05 but the seller charged her a shipping/handling fee of $275.75 plus 10% sales tax of $27.57. Aside from the outrageous fee does the seller have a right to charge sales tax in this instance. Additionally, Indiana sales tax is 7% so why would this seller charge 10%? Is a person with an occasional item to sell (as opposed to someone with a business) required to collect sales tax? Will this seller be required to report the income on the sale on her 2014 tax return and pay the taxes to the state? Thank you.

  • kelly

    My company has multiple divisions and offices: One in Arkansas, New Jersey, Connecticut and 2 in California. If I am only shipping product out of one location, would any of the other locations be considered a nexus?

  • JD

    I have a business in California. I want to start a drop ship business. If a customer in California orders a product online from our website and I have it drop shipped from overseas supplier to the customer in California, Do I have to charge my customer CA Sales Tax?

  • It’s hard to say for sure without knowing more about your business, but in general, if a business has physical divisions in a state that is enough of a presence to equal nexus in that state. So even if you only ship out of one state, you could be required to collect sales tax from customers in the other 2 states.

  • If you have a business based in CA then you most likely have nexus in CA. And that means you need to collect sales tax from customers in CA (even if the item is shipped from another state).

  • WL

    If I sell from California and most of my customers are in China or Taiwan, do I have to report any sales tax? Obviously, I am not going charge them sales tax on the purchases….

  • Kris

    Thank you for all this great info! Here’s my question: I have a fine art business out of my home in California. I understand about having to collect tax from buyers in CA. To sell prints, I plan to use a print-on-demand company out of WI. They will not store any inventory for me, just print on demand and drop ship to my clients. Does this make WI a nexus for me? Meaning I should collect sales tax from WI customers also?…Furthermore, the WI company says they have nexuses in 5 other states and so they collect tax on any order drop shipped to any of those states. So, by extension does that make those 5 states my nexuses also?
    Thank you.

  • Anyone who drop ships should seek professional advice on nexus, in my opinion. It’s far more complex than the case of a “normal” online seller.

    Here’s a post we wrote about drop shipping that I hope helps: http://taxjar.wpengine.com/drop-shipping-sales-tax/

  • Atvlunatic17

    I live in NY and sell on ebay. Usually no one in ny
    buys from me. Do I have to charge saless tax to them based on NY or no sales tax needs to be chsrged?

  • We don’t give specific tax advice, but it sounds like you’d need to find out how China or Taiwan wants to treat you, as an international seller. I suggest speaking with an accountant who specializes in cross-border selling to make sure you aren’t in violation of any laws or agreements in your customers’ countries.

    Now, if you have nexus in California and sell to anyone in California, then you do have to collect and remit sales tax. I hope this helps!

    • Michelle Moquin

      I am searching your website and can’t seem to find any information to my concerns. Or perhaps I am just not finding it. I am living in california and have nexus in california, but shipping tangible products to other states. I understand I need to charge tax for shipping within california, but do I charge tax when shipping outside of california? (I only have nexus in california.) And if so, do I charge california tax or the tax of the state I am shipping to? Thank you.

    • Michelle Moquin

      I am searching your website and can’t seem to find any information to my concerns. Or perhaps I am just not finding it. I am living in california and have nexus in california, but shipping tangible products to other states. I understand I need to charge tax for shipping within california, but do I charge tax when shipping outside of california? (I only have nexus in california.) And if so, do I charge california tax or the tax of the state I am shipping to? Thank you.

  • Judy

    Can an Ecommerce retailer charge whatever they want for sales tax? I am a resident in Florida and my local sales tax is 6.5%. The retailer’s tax in Clearwater, FL is 7%. However they charged me 10% tax and have not responded to 3 emails and a phone message where I asked them to correct it. Is this legal? Thanks so much.

  • Hi Judy, We can’t speak to the lawfulness of this act, but from what we understand, this seller should have charged you your local 6.5% sales tax rate. Sometimes areas have a special tax rate (ex: a special sales tax imposed on a district for a project like improving roads or schools). But if that isn’t the case then I definitely recommend you question the seller. You can also contact the Florida Department of Revenue. Their information is here: http://www.taxjar.com/states/florida-sales-tax-online/

  • joejoe387

    When making Ebay purchases I’ve noticed the writing something like this, “…buyer is responsible for all taxes, duties, custom fees, …” Does that form of writing exempt a seller from collecting tax on anyone?

    • Hi JoeJoe, unfortunately not. I can’t give legal or accounting advice, but can say that as a seller you collect sales tax while buyers pay them. And sales tax is governed by state law, which wouldn’t be superseded by an eBay agreement.

  • Michael Manning

    I have an even more confusing question. I opened up my business in Arizona, but my husband is military and so we have since moved to Florida. If I sell online do I have to charge sales tax to customers in Arizona or Florida or residents of both states? I have no offices in Arizona and am operating out of Florida but since the business was opened in Arizona is that enough reason to charge sales tax there?

    Also I plan on attending sporting events locally and in other states where I will sell things. Do I have to charge sales tax in the state where the events take place? Or do I only charge sales tax when the event is in Florida where my business is run from.

    All this sales tax stuff is so confusing. I just gave myself headache!

  • We have a blog post I think you’ll find helpful: http://taxjar.wpengine.com/online-sales-tax-new-york/

  • These are great questions! As for Arizona – you have moved away, so you should let the state know that you no longer have a presence (i.e. nexus) there. They’ll let you know what you need to do from there. If you keep your Arizona sales tax permit open, though, they will want to hear from you, so I definitely recommend contacting them and telling them your situation.

    As for traveling to other states, as with most things having to do with sales tax, each state is different. Some states consider that you have sales tax nexus if you sell one item, others want you to sell a certain amount of goods before you register for a sales tax permit. Still others will allow you to get a temporary permit if you plan to sell there for a short period of time. I recommend contacting the specific states you plan to sell in well in advance to find out what you need to do to get compliant. I hope this helps!

  • webwlf

    Hi, I was curious if you could help me. I am an internet business, but I buy food from local restaurants in different states and resell them online to residents in that state. Does this mean I have to be a registered/licensed business in each state that I sell in?

  • JoeG

    Hello!

    My employer is an online only retailer based out of Michigan that setup up an office and photography studio for me in my home. They were approached by the Florida Department of Revenue seeking back sales tax. The company i work for lied and said all the work i did for them was done on personal equipment.

    Is that legal?

    Thanks!

    JG

  • Darren Vader

    I run an online store. Our warehouse is based in Texas. We have a supplier who drop ships for us that is based in Georgia. If I have a customer in Georgia who places an order through our online store thereby making a purchase from a company with nexus in Texas – then I turn around and send this order over to my georgia-based supplier to drop ship the order on our behlaf – is our georgia based supplier required to colelct sales tax from our georgia based customer?

    We are tax exempt (resale) and have a georgia based drop ship supplier who is collecting sales tax from *us* – the tax exempt retailer – on orders that they ship on our behalf to *our* customers within the state of GA.. And we have no way to recover this expense. Are they correct in collecting GA sales tax from us – the buyer in texas who is tax exempt? If so, how do we recover that expense? I have been told that if we collect GA sales tax *as a tax* but aren’t actually paying the state of GA with it – that we are doing that wrong too.

    Very confusing and makes no sense to me. Can you help?

  • We don’t like to get into specific tax matters here, but we will say that companies have to charge sales tax in states where they have sales tax nexus, and an employee generally creates sales tax nexus. We can’t really comment beyond that.

  • Jane

    I live in New Zealand but dropshp online on various sites incl Ebay. In some cases my suppliers charge sales tax, but I choose to absorb this cost rather than charge my customers. Does this mean I do not have to worry about the various state taxes since I have paid it myself & not collected it from the customer? I want to avoid complication, even it if means lower profit.

  • Nil

    Okay here is my confusion. I have online stores at Etsy, eBay, Amazon, Bigcommerce etc.

    We’re located in NJ. Including Merchant Fullfilment of Amazon all online stores shipped from NJ.

    Our items are in 14 states for the FBA.

    Our CPA strongly advised to get licensed and we did.

    And we’re thinking Amazon charge the out of state taxes for only their FBA sales.

    Now Amazon charge Sale tax to FL even the nexus is NJ.

    How about ebay and etsy. They have only one tax setting is available which is where you located.

    Question: So if I have FL Sale Tax Id and

    a) I sell through FBA : I charge and pay to state

    b) I sell from ebay, Etsy, Merchant Account and shipped from NJ: Do I still need to charge to sale tax to FL customer.

    Question: If I stop FBA it’ll help to solve this problem for all my sale tax mess.

  • Jill B

    HI, I sell signs once in awhile and ship out of state. When I sell in state I know to collect my state sales tax. If I sell to a person in MT where they don’t have sales tax, do I charge them our sales tax or none at all? Thank you!

  • Hi Jane,

    I highly recommend consulting an accountant on specific questions. We’re not CPAs, so can only deal in generalities and can’t give you advice specific to your situation. Sylvia Dion at SylviaDionCPA.com specializes in international sellers and may be a great resource for you.

  • Here are a couple of general rules we can give you:

    1.) If you have sales tax nexus in a state, you need to charge sales tax to all customers in that state, no matter which platform. Ex: You have nexus in Kansas through FBA, but you sell to a buyer in Kansas through eBay – you still have to charge the Kansas buyer sales tax.

    2.) Even if you discontinue FBA, you may have “trailing nexus.” Some states require you to continue to collect sales tax from buyers for a certain period of time even after you’ve cancelled your sales tax permit. Each state should let you know if that’s the case when you go to cancel your permit. You should also ask, though, because sometimes they don’t.

    Finally, I highly recommend consulting an accountant on specific questions. We’re not CPAs, so can only deal in generalities and can’t give you advice specific to your situation.

  • Hi Jill,
    You’d only charge sales tax to customers in states where you have sales tax nexus. Here’s more about that:

    http://taxjar.wpengine.com/sales-tax-nexus-definition/

    But if you do have nexus in another state, you’d charge the sales tax rate in the state you’re shipping to, not your home state.

  • TucketG

    Do you know if I have to charge sales tax that is combined for state and county? Or just the state sales tax rate?

  • Mary

    i started selling on AZ as a merchant in April 2014. Didn’t know much then. Didn’t even know if I would continue. Just used books. In August 2015, sent books in to FBA. Have not collected any sales tax and haven’t done a lot of sales. But gradually increasing. So, how do I get on track and go back and fix etc. I just recently started the sign up process with your company, not sure Ive completed. How do I get this going and what about past sales.

  • Hi Mary,

    I highly recommend you start by reading our Sales Tax 101 Guid for Amazon Sellers. You can find it at fbasalestax.com. This really gets you started. From there, feel free to join our Facebook group or ask here if you have questions.

    https://www.facebook.com/groups/SalesTax4EcommerceSellers/

    Good luck ramping up your business!

  • It’s the combined state and county rate.

  • Rick Brewer

    I am a super small graphics guy who works from home… I buy business cards and such from a supplier and resells them. Do I need to charge sales tax if I am selling these online?

  • Amelia

    I live in Mississippi and have started my own LLC clothing business. I will only sell online and I do not have a store front. I will sell out of my home. Should I register to pay sales tax?

    • Hi Amelia,

      Yes, you should collect sales tax on any sale you make in your business. Fortunately, if you only sell out of your home you most likely only have sales tax nexus in Mississippi, so you would only have to register in Mississippi. You should check out our Sales Tax 101 for Online Sellers Guide for a complete overview of what you need to do for sales tax: http://offers.taxjar.com/sales-tax-101-whitepaper

      Good luck with your venture!

  • If you are selling taxable, tangible goods then you need to charge sales tax to buyers in states where you have sales tax nexus.

    So this all depends on whether business cards are considered a taxable item in your state (or states) where you have nexus. Your best bet might be to contact your state’s department of revenue or a sales tax expert to find out. Here’s a list of state departments of revenue: http://www.taxjar.com/states

    And a list of sales tax experts: http://www.taxjar.com/sales-tax-accountant-directory/

  • Rachel

    I live in CA and run an Etsy store. I’m so confused over tax rules. Do I collect CA tax from everyone? Where can I find info on this?

  • beebs

    I live in CA. Most of my clients are in IN, as I recently relocated from there. I have most orders drop shipped though non of my vendors have station in IN. Do I charge them IN rate or CA rate? And if I do charge IN rate do I have to have a resale certificate for IN and file monthly to report?

  • Pamela

    I have a Corporation in California with two retail outlets called Acme Goods. I also set up a separate New York corporation under a different name, however, the retail outlet there is also called Acme Goods. Do I charge destination sales tax when shipping from CA to a customer in NY?

  • Hi Pamela,

    I recommend you check with a sales tax expert on this matter since you have two locations under you control, one in California and one in New York.

    If you didn’t have the New York location (but still had nexus in New York for whatever reason), you would charge sales tax to customers in New York based on the ship to destination.

    Here’s our list of vetted sales tax experts who can help: http://www.taxjar.com/sales-tax-accountant-directory/

  • inisheer

    I am setting up an Etsy-like marketplace – a pure venue where others do online sales. I have only one office in New York State. Do I tell my sellers that they only need to collect tax from buyers in states where they have a nexus? What about those who sell from Europe to the U.S.? It appears to me that they are not charging tax now but some have – buried deep in their websites – warnings that buyers may be liable for some type of duty fees.

    • Hi inisheer,

      Every business has to make a business decision. If those businesses are selling goods then they need to charge sales tax in states where they have sales tax nexus. Also, I recommend speaking with a CPA to determine any liability you may have. Here’s a list of vetted sales tax pros: http://www.taxjar.com/sales-tax-accountant-directory/

  • OFIR

    I live in israel and i’m doing drop shipping from Amazon FBA to eBay, and i’m pay tax for each purchase on amazon. Do I have to charge sales tax to my customers?

  • Jose Javier

    I live in New York and bought something on eBay from a store with address also in New York, but shipps from a warehouse in Hialeah, Florida. Is it legal for this person to collect tax if the item i’m getting is NOT coming from New York?? According to nexus i shouldn’t be charge tax, because in their example it says, and i quote (“If you’re in Dallas and sell to someone in Ohio and Amazon ships to that person from one of it’s Ohio facilities then you are supposed to collect sales tax from that customer”) well,… my item is being shipped from Hialeah, florida, and i’m not in FL, so why the tax charge?? The issue is not the money, because i’m talking about $7 but is that not only this store took forever to ship the item, but also where very disrespectful trying to justify the delay with a “you’ll get your item eventually”. They did apologise, for their comment, but after seeing more than one person with similar issues, i wonder if it’s legal what they are doing??

    • Hi Jose,

      They most likely have sales tax nexus in New York, too. It doesn’t matter where the item is shipped from, only whether the seller has New York sales tax nexus. I hope this helps!

  • ny3ranger

    I have another one. I live in ny and want to create an ecommerce site for delivery of flowers in another country. Only the orders are being done online and can be taken from the entire world. But the delivery is only in a single country. Is there any sales tax that needs to be collected.

    • Hi there, that would depend on that country’s sales tax laws. Since sales in New York is charged to buyers in New York then NY sales tax isn’t applicable here.

  • Ron

    There are at least two spots in this article where the author used the word “it’s” (which means “it is”) but intended to use the word “its” (which means “belonging to it”).

  • Sean Moraffah

    I sell on my own website, eBay, and FBA. I don’t use any FBA inventory for my site or eBay sales. Do I have to collect sales tax for our website or eBay sales in the states that Amazon has a warehouse? Does my nexus with Amazon carry over into eBay and/or our own website sales? Thanks for your help!

    • Hi Sean,

      You should collect sales tax from buyers in every state where you have sales tax nexus no matter what platform you sell to them through. In the state’s eyes, nexus is nexus whether you sell on FBA, eBay or in person. I hope this helps!

  • Nick

    I’m starting up an ecommerce business based in Florida but our warehouse is in Utah. We will be selling through Amazon and shipping to customers throughout the United States. Should I only charge sales tax to those in Utah and Florida or all states? Thanks.

  • Hi Nick,

    You’d need to determine where all you have sales tax nexus and start from there. This is your best bet to get started figuring that out: http://taxjar.wpengine.com/sales-tax-nexus-definition/

    Its sounds like you definitely have nexus in Florida and Utah, but some business activities could give you sales tax nexus in other states. I hope this helps!

  • Timothy

    I run the eBay store for the company I work for and we sell used restaurant equipment. All items over 149 lbs (items requiring freight shipment) are sold on “where-is” terms (FOB origin) in our listings. In other words, we ask our customers to arrange for and send their own freight service to pick up and deliver their equipment.

    Our CPA has advised us that for our tax purposes, the seller is taking possession of their item(s) as soon as said item(s) are loaded onto the truck they sent. Is it true that sending a third party shipping company for your items is essentially the same as picking it up in person for tax purposes?

    • Hi Timothy,

      That’s what we understand. When you start looking at the language around sales tax and shipping in most states, you’ll see that they usually do mention instances where the buyer picks up the item. You can actually find your state here and then click the links in the individual blog post to see what that state says about shipping/freight: http://taxjar.wpengine.com/sales-tax-and-shipping/

      I hope this helps!

  • Liana Ly

    If I live in California and have a business that I manage only from home, do I have nexus in any other state besides California?

  • Abd

    I live in Georgia and I have LLC business and sell on ebay usually no one in GA buys from me do i need charge saless tax or no?

  • Hi there,

    You only need to charge sales tax to buyers in states where you have sales tax nexus. Here’s how to determine whether you have nexus:

    http://taxjar.wpengine.com/sales-tax-nexus-definition/

    If you only have nexus in Georgia, then you’d only need to charge sales tax to buyers in Georgia. That said, Georgia requires you to have a sales tax permit before you can charge sales tax, so here’s a link on how to do that:

    http://taxjar.wpengine.com/register-sales-tax-permit-georgia/

    I hope this information has helped!

  • MATT

    Ok so I know if I have a NEXUS in NY I need to charge sales tax to customers in NY. The question is: Do I need to only charge NY State rate (4%) or I need to charge NYS rate plus the local sales tax rate that the customer lives in also? Thanks!

  • Carlyn Davis

    Our business is in NC and we have a distributor in FL that does most of our drop-shipping for us. They are NOT owned by us so it is not a “presence” for us in FL. 2 questions – #1, if we sell to someone in NC and our FL distribution ships to NC for us, do we charge NC Sales Tax to the customer? #2, if we sell to someone in FL and our FL distributor ships to the FL address for us, should our distribution charge us FL Sales Tax for this drop-ship? We have a resale certificate which usually exempts us but we have had issues where they do not accept the certificate. I look forward to your feedback.

  • Hi Caryln,

    Drop shipping is one of the trickiest sales tax relationships. This post by sales tax expert Ned Lenhart might help: http://taxjar.wpengine.com/drop-shipping-scenarios-sales-tax/

    If not, we recommend you contact a sales tax expert (here’s a great list: http://www.taxjar.com/sales-tax-accountant-directory/) for help with specific questions.

  • Judy Christadore

    I live in CA. I bought from a merchant in Florida. I asked why they collected sales tax since they only have a store in FL.
    They said CA states that you must pay the sales tax??? I order online to much larger stores and they don’t charge me tax?
    Help?

    • Hi Judy,

      Merchants like the one who sold to you may have sales tax nexus in a state for a number of reasons – they may have an employee, contractor or salesperson there or they may store goods in a warehouse there. That’s just one of many reasons. If you’re ever suspicious that someone is charging you sales tax without being registered for a sales tax permit then most states allow you to look up that business’s permit number. Other than that though, every business is different with different factors that go into where they must charge sales tax. I hope this helps!

  • Kathy

    I operate my online apparel business out of NJ but will start selling on Amazon in Canada shortly. Do I need to collect sales tax from the Canadian residents?

  • Hi Kathy,

    This is a great questions for our Facebook sales tax group. While I don’t have the answer, we have a lot of international sellers on there who can shed light!

    https://www.facebook.com/groups/SalesTax4EcommerceSellers/

  • TraderJeff

    I am buying an item that is made and shipped from Austria. I live in CA and after talking to two US companies that sell this item (as “middlemen”)…one says I don’t need to pay CA sales tax as the item it made in Austria and ships directly to me from Austria. The second company says that even though the item is made in Austria and ships directly to me from Austria that I still need to pay the CA sales tax when I order the item from the second company. Neither company is in CA…both are on the East Coast.

    The company charging the sales tax has a better refund if not satisfied policy than the company not charging sales tax…so I’d appreciate knowing…which company is right?

    Must I pay CA sales tax to a US “middleman” company for an item that is made in Austria and ships directly to me from Austria?

    • Hi Jeff,

      It depends on if the company selling you the product has nexus in California. Also, according to most states, even if you don’t pay sales tax to the original seller you have to pay the “use tax” to the California BOE (or that state’s department of revenue.) So you’ll owe the sales or use tax either way, it just depends on whether you pay it to the original seller or to the BOE. I hope this helps!

  • FFH

    According to the Indiana DOR website, sales tax licenses are renewed every two weeks. Does this mean they assess the $25 fee to FBA sellers that frequently?! Sheesh.

  • Sarah Brown

    I just got started with Etsy. My shop is doing fairly well, and though Etsy won’t be sending me a 1099 (i won’t meet the requirements), I’m wondering about taxes. I live in CA. Do I need to charge and collect sales tax? Do I need to have a business license?

  • samb13

    Im selling tshirts online from PA. Tshirts are not taxable in PA. Do i still have to collect sales tax?

  • Hi Sarah,

    If you sell tangible personal property that is taxable (and you probably do) then you do need to collect sales tax.

    Check out our guide to sales tax for online sellers for what you need to know! http://www.taxjar.com/guides/intro-to-sales-tax/

  • ssk1234

    We have a North Carolina based nexus and have been developing a mobile application. This app allows users to download games if they have enough points available on the app. Users can buy points for specific amounts. Users can be from various sates in US. Should we pay sales tax on the points that users buy. Are these points considered digital goods ?

  • Hi there,

    Digital products are taxable in North Carolina. That said, this is a tough one and I’d either get with a sales tax expert (we can’t give specific sales tax advice, but this is our vetted list of pros): http://www.taxjar.com/sales-tax-accountant-directory/

    Or contact the North Carolina Department of Revenue and request a letter ruling. Good luck with your app!

  • Chris M

    Does nexus in a state apply down to county levels? Or just state? Example- if we’re a CT business selling into PA (with nexus in PA), and in particular selling into a county that imposes an additional 1% county tax, should that 1% be collected on the order and filed (in addition to the 6% state tax)? Or are county taxes purely imposed on businesses actually, physically located there within that county? Thank you.

    • Great question! You would need to charge the full tax rate at your buyer’s location. So yes, if you are selling into another state and the buyer’s ship to location has an extra 1% tax then you would charge the full state + county + city/jurisdiction/local (or whatnot) sales tax of that location.

  • Jesse Vargas

    Hello I live in Texas and sell on ebay and have a store on shopify. My dropshipper is in California, when i get a sale in California, my dropshipper charges me CA sales tax on the item being sold. Do I have to apply for a sales tax in California and pay taxes to them?

  • Hi Jesse,

    We can’t give specific advice, but here’s more about drop shipping:

    http://taxjar.wpengine.com/drop-shipping-scenarios-sales-tax/

    I hope this helps!

  • John

    Hi! I’m just getting started with this “nexus” fiasco. My question is, if I have a nexus in a state due to Amazon FBA warehouse presence, do I only have to charge sales tax to residents of that state who buy those particular items from that state’s warehouse? If I ship them something from another warehouse out of that state do I have to charge them tax? And if, for example, I sell something on eBay and ship to that state from my location, would I have to charge tax? In other words, does having “nexus” mean a business-wide sales tax of all sales going to that state is in effect, or only on stuff shipping from that in-state Amazon warehouse to customers in that state? Thanks!

    • If you have nexus in a state, you have to charge sales tax to any buyers in that state, regardless of how they bought it (Amazon, eBay, in person, etc.) But if somebody in a state where you don’t have nexus buys something from you, you don’t have to charge sales tax, regardless of where it comes from.

      • John

        Thanks! But doesn’t a nexus only require taxing items shipping from the
        nexus state to the same nexus state? Or is tax required even if I ship
        from my home state to the nexus state? In other words, if I’m not
        utilizing the nexus in that state for the transaction (shipping from
        that nexus), shouldn’t I not have to pay tax to that state for a
        transaction? Or does a nexus in a state means sales tax all the time
        regardless of what state I’m shipping to them from? It would be
        ridiculous if the latter were the case, because an eBay buyer, for
        example, would probably cancel an order or avoid a listing once they realized I charged
        them tax even though I’m not in their state.

        Also, in the case of
        Amazon FBA, can a nexus disappear if I sell out of my inventory in that
        state? Or does the fact that I have registered with a tax ID represent
        a permanent nexus regardless of whether or not I still have inventory
        in an Amazon warehouse?

        • Hi John,

          If you have nexus in a state the nexus exists regardless of where the transaction originates. So yes, say you live in Oregon but have sales tax nexus in Pennsylvania due to having goods in an FBA warehouse there, you should charge ALL buyers in Pennsylvania (eBay, Amazon, etc.) sales tax.

          Also, nexus doesn’t “disappear,” unfortunately. If you no longer think you will have goods in an FBA state you can cancel your sales tax permit in that state and let them know you’ll no longer be selling there. (Also be wary that some states have “trailing nexus” meaning they may still require you to file sales tax returns for a period of time even after you no longer have nexus.)

          It’s definitely not an ideal situation for sellers, but it’s the law of the land as defined by Quill v. North Dakota.

          • John

            Thanks for the reply.

            Sounds like a great way to sabotage all my other business channels! Certainly half my customers would switch to another vendor if I were to suddenly start charging them tax for no apparent reason.

            Quill is law of the land, but it’s outdated and an awkward fit to the FBA situation at best, and there is certainly a huge lack of clarity in the law. Quill mailed catalogs to North Dakota soliciting North Dakota business. But it’s easy to see how Amazon FBA could be considered NOT constituting “significant nexus” — you don’t own or lease the building, you are only dealing with the state by mail, and you aren’t specifically soliciting business in the state, i.e. you are not “engaging in regular or systematic solicitation of a consumer market in the state.” Plus, you are not directly benefiting from the arrangement (it’s easily argued Amazon has more to gain from the warehouse situation than its sellers).

            I think this sums it up: “Accordingly, contrary to the State’s suggestion, a corporation may have the “minimum contacts” with a taxing State as required by the Due Process Clause, and yet lack the “substantial nexus” with that State as required by the Commerce Clause.”

            Over the last day I have polled about a dozen Amazon FBA sellers, and NONE of them are paying tax in other states due to nexus, and ALL of them were advised by their CPAs not to do so until further clarification of the law. I was pretty stunned, honestly, and I’m also frustrated that I am wasting my time on this considering that apparently 99% of FBA sellers are probably not doing this, both because of lack of clarity in the law, and most importantly due to the absolute impracticality of it.

            To me it seems clear that most reasonable people will wait for further legal clarification before committing the corporate suicide that this mess requires. I understand that professional tax people can’t go “on the record” telling people not to do it, but I think reality is that most people have decided not to do it, and for good reason.

          • We understand your frustration and we also think sales tax should be much, much simpler if it is to exist. We’re written about this a lot in our response to all the “internet sales tax” bills coming out of Congress.

            That said, we’ve tried hard and haven’t found a single sales tax expert or state department of revenue who will take the position that storing goods in an Amazon warehouse doesn’t create nexus. Most states specifically state in their laws that “good in a warehouse” create sales tax nexus. Sales tax compliance is complicated – that’s why TaxJar exists at all! – but we live and breathe this stuff and highly recommend following the existing law until one day, hopefully, states decide to simplify.

          • John

            Sales tax experts won’t take a position against this because going “on the record” telling people to do something that could be interpreted as ignoring the law is not a very good professional strategy. It’s a CYA thing. But “off the record” they are mostly all telling their FBA customers to ignore the nexus issue for now — I’ve been digging into this issue the last few days, and I’ve talked to several of them. They definitely exist. The problem is that with tax professionals all playing CYA while “on the record”, the general public gets the wrong impression about what the masses are actually doing, which is, largely, ignoring the nexus issue. Keep in mind, I’m talking about FBA. If you sign a lease on a warehouse in another state, of course that constitutes nexus. I don’t argue that a genuine nexus shouldn’t be taxed, but rather that FBA doesn’t constitute “significant nexus” and the right of the states to do this is questionable at best. I really think everyone should read Quill vs North Dakota, because it really becomes apparent that this whole topic is on shaky ground.

  • Haya

    I live in NY, I have a website that provides a service. The service is teaching a language. I dont sell anything else but this service. Do i have charge a sales tax on my service?

    • Services are generally not taxable in New York

  • Cuquita

    We are a retailer in Florida. If we ship our product to customers out of the state, do we charge the Florida 6% sales tax to them? Some always complain that they shouldn’t be charged because their state doesn’t charge.

    • Hi Cuquita,

      You should only charge sales tax to buyers in states where you have sales tax nexus. http://taxjar.wpengine.com/sales-tax-nexus-definition/

      And in that case, you charge the rate based on that state. For example, you run your business in Florida then you should charge Florida sales tax to Florida buyers only. Florida is a destination-based sales tax state, so you should charge sales tax at the rate of your buyer’s ship to address.

      If you don’t have sales tax nexus in any other states, then you shouldn’t charge sales tax to buyers in those states. Another example, let’s say you have sales tax nexus (i.e. have to collect sales tax) in Florida and Georgia. You would charge Florida sales tax rates to Florida buyers and Georgia sales tax rates to Georgia buyers. I hope this explanation helps!

      Here’s more about Florida sales tax: http://www.taxjar.com/states/florida-sales-tax-online/

  • Liz Ward

    Hi Mark….thanks for this website…it is super helpful! OK…my question is this: I sell digital downloads online. My home state is Illinois but my customers live all over the US. I just got an Illinois tax license. Now how do I charge tax? Based on my state or theirs?

    • You only need to charge sales tax in state where you have sales tax nexus:

      http://taxjar.wpengine.com/sales-tax-nexus-definition/

      So if you only have sales tax nexus in Illinois then you would only charge Illinois customers sales tax, and then only on taxable items. It looks like digital goods are not taxable in Illinois. (But there are sometimes exceptions so it’s always a good idea to check.) http://www.revenue.state.il.us/legalinformation/regs/part130/130-2105.pdf

      Now, if what you are selling is taxable, Illinois is an origin-based sales tax state. You’re lucky! This means that if what you are selling is taxable, you charge all Illinois buyers the sales tax rate of your business location. (Most states are destination-based sales tax states, meaning you charge sales tax at the buyer’s location and that’s a lot trickier.)

      I hope this has helped! Thanks for the kind compliments on the blog!

  • Bonnie

    My business is in Denver, Colorado. One of my customers is headquartered in Denver and has offices in several states including Oregon. We’ve been collecting Colorado and Denver sales taxes from this customer regardless of which of their locations we ship to. Today I was told we mustn’t collect sales tax when shipping to their Oregon office. Is this accurate?

    • Hi Bonnie,

      Oregon doesn’t have a sales tax, so you wouldn’t charge sales tax on any items you ship to an Oregon address. I hope this helps!

  • Moody Skincare

    I have an online shop in Texas..do you charge taxes to out of the state of Texas state customer ?

    thank you !

  • Kevin

    If I am in Texas, and buy wholesale from a company in Florida who does not charger sales tax, and I sale to a client in California, do I have to charge sales tax?
    Our nexus is only in Texas.

    Thanks for the help

    • Hi Kevin,

      You only need to charge sales tax to customers in states where you a.) have nexus b.) the item/service you are selling is taxable. It sounds like you don’t have to charge sales tax in this case.

      • Sarah

        My company only has offices in Texas. We buy from manufacturers on behalf of end-users. If the company we buy from has a nexus in California, and the end user is in California, should we be charged sales tax by the manufacturer?

  • lisa

    If I have a business in Florida (online) and I use only a drop shipper out of California, all of my charges go through paypal would I still need to charge sales tax by the county in Florida based on where it is shipping to in Florida?

  • Knowse

    My company and warehouse is located in california. If I am selling merchandise online (through an online web store), to somebody in Arizona, do I charge any sales tax? Arizona is an example. My quesiton is if sales tax needs to be charged to anyone outside of the state where my business resides.

    • Hi Knowse,

      You only need to charge sales tax in states where you have sales tax nexus and where the items/services you are selling are taxable. (Most tangible items are taxable.) Here’s how to determine where you have sales tax nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/

      Long story short, if you don’t have nexus in Arizona then you don’t need to charge sales tax to buyers with ship to addresses in Arizona. I hope this helps!

  • Philip Taggart

    I have a client who has his retail stores only in NY. We have an e-commerce website, we charge tax to NY customers, BUT, do we charge tax to someone who lives in NY when the purchase is being shipped to another state?

    • Hi Philip, You charge sales tax based on the ship to address. So even if the customer lives in New York if they have the item shipped to a state where you don’t have nexus then you don’t have to charge sales tax. I hope this helps!

      • Phil Taggart

        Really helpful – many thanks…

  • Gary Ebersole

    We present our products to clients using trunk shows in our client homes around the U.S. An order may be taken using a tablet POS application but the fulfillment takes place the next day from our shop in another state (New Mexico). Does a traveling trunk show represent a “nexus” or does the fulfillment and final order processing define the nexus? The client could return home and order online themselves which then makes it obvious the nexus is our shop in New Mexico. The POS app also thinks the order is online and in New Mexico.

  • lee renner

    I have a new Jersey based home studio business. I made stained and etched glass panels for a New York city restaurant in my my home business. Do I have to charge the restaurant sales tax? Or does my client have to pay to New York? Thanks!

    • Hi Lee,

      If you only have sales tax nexus in NJ (more about nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/) then you only have to charge sales tax to buyers in NJ.

      That said, your buyer is supposed to pay “use tax” to New York for anything he/she buys out of state for use in the state. This is very hard for states to enforce, though! I hope this helps!

      • lee renner

        Thank you so much for your answer, I was so concerned because this was a big job! I was so glad to find your web site. Lee

        • Glad you found us and asked a question. Good luck with your job!

  • Hi Gary,

    Unfortunately, this varies on a state by state basis. Most states consider having a representative in a state selling items to create sales tax nexus. Some are more lenient – in California you have to be engaged in business activity for more than 15 days to be considered to have nexus – but in other states, like Texas, are incredibly aggressive and consider a sales person stepping foot in the state once and making a sale to create sales tax nexus. While this doesn’t quite cover your position, it may help you: http://taxjar.wpengine.com/does-attending-a-trade-show-create-sales-tax-nexus/

    Also, here’s a list of sales tax experts who can help you figure out your individual sales tax liability: http://www.taxjar.com/sales-tax-accountant-directory/

    I’m sorry to be the bearer of confusing news, and I hope this helps!

    • Gary Ebersole

      This was an excellent answer! The pointer the trade show post was spot on since our trunk shows are very much like selling trade shows. Thanks for your help. As we get closer to launching, I’ll get back to you to sign up for TaxJar. Thanks!

      • Sounds great, Gary! Glad we could help! Maybe I’ll write up a blog post about trunk shows in the future for folks like you, too! 🙂

  • Usman Ghani

    I am trying to start my own website where I am going to sell clothes. Should I collect sales tax on the product?
    FYI it’s solely online no physical location

  • vijayks

    my client is selling education packages in California, so i wanted to know about the sales tax applicable on selling of education packages.

    • Do you mean digital products (eCourses, websites, etc.)? Or tangible personal property (physical books, etc.)? There’s definitely a difference. Most tangible personal property in California is taxable but most digital products are not. Let me know and I can provide more guidance. The California Board of Equalization also offers great guidance. Here’s a good start: https://www.boe.ca.gov/formspubs/pub109/

      • vijayks

        They are selling e-courses online for students of different grades in various different subjects like english, maths etc. There nature of work is to install the education packages on their customer mac book , pc or any other devices. now its clear to you, please help me in that case…

        • It sounds like they are selling digital products, so you would need to check with the states where you have nexus (more about that here: http://taxjar.wpengine.com/sales-tax-nexus-definition/) and find out if digital products are taxable in that state. This is an area of tax law that is very in flux right now, as more states realize that people are buying things digitally now (rather than tangible personal property that you can hold with your hands.) Here’s a list of the states and a way to contact each of them. I hope this helps! http://www.taxjar.com/states

          Good luck!

  • Kim Ng

    Hi. Hope you can help: A LLC registered in Olkahoma is planning to sell tickets to a fan-club type event in Texas. Also, merchandise designed by fans are being sold for fundraising for the event. Customers may be from all over the world. What kind of taxes should be charged? Please check out pentaconevent.com for more information on the business.

    • Great question! So you only have to charge sales tax in places where you have sales tax nexus. Read here for more about nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/

      Second, you must be selling tangible personal property. Merchandise will likely be taxable. You’d have to check with Texas on the tickets – every state is a bit different.

      So if your business is ONLY in Oklahoma and doesn’t have *any kind of presence* in Texas, then you may not have to charge sales tax to Oklahoma buyers.

      That said, Texas has a pretty broad definition of nexus and they can be aggressive. If you go into Texas for even one day to make sales, then you have sales tax nexus for the entire year and must collect sales tax. So if you guys are stepping over the border to Texas to sell items then you’ll likely need to also register for a Texas sales tax permit and charge sales tax to Texas buyers. And if you have sales tax nexus in any other states (maybe you store goods in a warehouse there, or have an employee based there) then you need to register and charge sales tax there, too.

      I really recommend reading this guide to sales tax: http://www.taxjar.com/guides/intro-to-sales-tax/
      and, if you have further questions about your business specifically, contacting an accountant: http://www.taxjar.com/sales-tax-accountant-directory/

  • You would have a physical location where you are located. Here’s more about sales tax nexus to help you get started: http://taxjar.wpengine.com/sales-tax-nexus-definition/

  • Roman Bayik

    Hello
    What if I have LLC registrated in USA but I’m not USA citizen? Is it right that I should pay tax for each my customer from USA but not for people from the other countries?

    • According to individual U.S. states, anybody with nexus in that state must collect sales tax from buyers in that state, including businesses operating in other countries. You can find out more about that in our sales tax 101 guide: http://www.taxjar.com/guides/intro-to-sales-tax/

  • brittanylak

    Hi, I just started an online business in GA. I do not have a physical store or warehouse. I do everything from my residence in GA. A lot of my customers are in GA, but I also ship out of state. Do I need to collect sales tax for the GA customers? If so, how much?

  • Daniel Roma

    Hi Mark –

    I just had a friend forward me your article. This is great! I’m starting an online business. I live in OH – I’m guessing I would only collect sales tax only from OH Customers..What happens if I ship internationally?

    • Hi Daniel,

      You are required to charge sales tax to customers in states where you have sales tax nexus. You can find out more about nexus here: http://taxjar.wpengine.com/sales-tax-nexus-definition/

      So if you only have business activities that create nexus in Ohio, you would only collect from Ohio customers.

      As for international sales, sales tax is a U.S. only tax so you wouldn’t need to collect it from U.S. sellers. That said, you may be on the hook for other taxes and duties depending on where you sell. I hope this helps!

  • Debra Kaye McKrill

    I live in Oregon. I have had a auto renew subscription for Ancestry.com for several years and they have never charged me tax. This year they charged me almost $13 in tax on my subscription. Then when I asked them why they told me to check Oregon law for changes. I found Oregon has not changed its law. Is there a new law in Utah that they must charge Oregonians tax???

    • Hi Debra,

      That’s strange. I can’t tell you what might have changed, but I can point you in the right direction. I recommend calling the Oregon Department of Revenue to find out! (503) 378-4988

  • Gregg

    If you live in California and make an online purchase from someone that is in California but makes the purchase from someone in Illinois and has them ship it directly to you are you still responsible for California sales tax?

    • Sales tax charged depends on the ship to address, not where the item is coming from. So if that merchant has California nexus and sells a product to someone else in California, then they (unless there are some other extenuating circumstances) that California sellers would charge California sales tax to the California buyer. I hope this has helped!

  • Michael Hubbard

    I live in Missouri, and the only physical locations are in Indiana, will the company still collect sales tax from me?

    • Hi Michael,

      From our understanding, that depends on if you do any business activities from your home. Here’s more on “home state nexus” http://taxjar.wpengine.com/home-state-nexus/

      If you’re afraid your business activities from home (such as running an eCommerce store, storing inventory ,etc.) might create nexus, then check with the Missouri Department of Revenue (Website: Department of Revenue
      Tax line: 573-751-4450) or a good sales tax CPA. Here’s a vetted list: http://www.taxjar.com/sales-tax-accountant-directory/

  • suzy

    Hi, I sell on Amazon and my business is located in CA and ship from CA.

    So I collected sales tax to the customers in CA only. But yesterday, one of my accountant told me that for Amazon,

    I’m supposed to collect the sales tax for ALL customers. I was surprised and shocked and wants to know which one is correct.

    Please advise and thank you so much!

    • Hi Suzy,

      The answer is middle ground. You need to collect sale tax in any states where you have sales tax nexus, and storing inventory in a state gives you sales tax nexus there. I recommend starting with our Sales Tax 101 for FBA Sellers Guide: http://www.fbasalestax.com

      Let us know if you have questions after that!

  • Michael

    I operate a business in Missouri, but want to sell product to a company in Michigan. We would be buying a product from Wisconsin, it would ship to Michigan and never touch Missouri soil. I know that I am not to collect sales tax, as I do not have a nexus in Michigan, but will the customer eventually have to pay tax on this product? I am trying to calculate a payback on an energy saving product and I want to make sure I account for all of their actual costs.

    Thanks.

  • Raina Marie

    I have a website where people can pay for ad features and add their own products to my shop, basically vendors. However I am not selling anything just providing them with a platform, so my question is do I need to get my website registered in ny? Can I have all transactions go to my personal account ?

    • Hi Raina,

      Great question! Your vendors are likely required to collect sales tax in at least one state if they are selling taxable products. We actually have a TaxJar for Marketplaces that can help you with that. http://www.taxjar.com/marketplaces/

      As for your questions about New York, it looks like a software as a services (SaaS) solution is considered taxable in New York. I recommend contacting either a good sales tax CPA (list here: http://www.taxjar.com/sales-tax-accountant-directory/) or the New York Department of Revenue to find out about your liability. I hope this has helped!

  • This is a drop shipping relationship, which can get complicated. Your supplier may well be correct in charging you sales tax. I recommend you check out this post: http://taxjar.wpengine.com/drop-shipping-scenarios-sales-tax/

    And if you have further questions contact a good sales tax CPA. We have a vetted list of experts here: http://www.taxjar.com/sales-tax-accountant-directory/

  • kristina

    If I buy coffee (k cups) online can the company charge me sales tax if my state does not charge sales tax on coffee?

  • kristina

    If I buy coffee (k cups) online can the company charge me sales tax if my state does not charge sales tax on coffee?

    • Hi Kristina,

      They shouldn’t charge you sales tax on non-taxable items. I suggest sending a note to their support to make sure they have their sales tax settings set up correctly. I hope this helps!

    • Hi Kristina,

      They shouldn’t charge you sales tax on non-taxable items. I suggest sending a note to their support to make sure they have their sales tax settings set up correctly. I hope this helps!

  • we are ATOMO Dental, a dental supplies company in north CA: http://www.atomodental.com.
    Just want to confirm one thing: in CA, we only need to charge state tax + county tax for all the cities within our county, but only state tax (no county tax) for all the cities outside our county, correct?
    Thanks so much!

  • we are ATOMO Dental, a dental supplies company in north CA: http://www.atomodental.com.
    Just want to confirm one thing: in CA, we only need to charge state tax + county tax for all the cities within our county, but only state tax (no county tax) for all the cities outside our county, correct?
    Thanks so much!

  • Greg

    If I do printing for a corporate office in Tennessee but ship to their divisions in another state do I charge them sales tax?

    • While I can’t comment on your specific situation, I can tell you that sales tax is generally charged based on the ship to address.

  • Brittney Stuart

    I recently ordered an item on eBay.com. The sellers business is is Washington and I live in Utah but I was charged sales tax by the seller. How do I find out if they can legally charge me sales tax and if they can’t, how and where do I report this? It looks to me as if this seller charges all their buyers sales tax regardless of where their buyer is.

    • Hi Brittney,

      The business may have sales tax nexus in your state. Also, some businesses elect to register for sales tax permits and charge sales tax in other states even when they don’t have nexus. You can always ask the seller why they charged sales tax. If you think they may have been charging you sales tax without a license, you can contact your state’s department of revenue to find out if they have one. I hope this has dispelled some confusion!

  • Sandeep

    Hi i have one question. We are selling products online with store pickup. if user select store pickup but user billing address is out of state do we need to collect sales tax. even user is from different state & he is collecting things from our store. ( NOTE: he is paying online with his real address ) if anyone has idea please share…

    • Hi Sandeep,

      Sales tax is generally charged at point of sale. So if your customer is picking up in the store that would be the point of sale and you’d charge sales tax. I hope this helps!

  • disqus_P7x8ZvaAIj

    I live in California, and sell clothing online from home. If I’m not required to collect sales tax from someone from say, in New York, do I have to pay/file sales tax on that purchase? Do I take it out of the profit of the sale?

    • Hi there,

      Sales tax is on the transaction, not the item. So unless you have a reseller’s permit you’d still need to pay sales tax when you buy the item, and that doesn’t have anything to do with charging sales tax when you sell the item. I hope this helps clarify any confusion!

  • Mike

    I own a branded store in California that is its own corporation. I own a store in Florida, different corporation than the California store, but with the same branded name. The Florida corporation runs a website where it offers items for sale nationwide.
    1. Would this site, if it does not list or mention the California store that uses the same trademarked name, have to charge sales tax to shipments made to California from Florida?
    2. If no, would the site have to charge sales tax to California if the California location using the same trademark store name was listed on the website? 3. What if inventory was offered from the CA location (same trade name, different corporation) I assume sales tax would be charged on CA and FL sales shipped from CA, but what about items from the Florida stores shipped to Ca – i.e. if using the same trademark and mentioning the CA store on the website does not trigger the need to charge sales tax to CA customers shipped from FL, would offering items from CA trigger the need to charge sales tax on all items shipped from FL to CA?
    4. If the Florida based website made an agreement to include a North Carolina’s company’s inventory for sale on its website for dropship, would the Fl website, due to offering some dropship product from NC, charge tax to NC on all sales, whether drop shipped from
    CA or shipped from FL? Or only charge sales tax to customers in NC and FL on the specific items drop shipped from NC?

    Any help would be appreciated.

  • akram

    Hi, I’m from asia and I live in asia.I sell stuff on the internet and I have customers from USA.I don’t have store in any country of my coustomers just the one in my country. The question is am I required to pay tax for the USA .If the answer yes how I can pay the tax.

  • tessa kelly

    I have an industrial distribution company in TN. I’m trying to set the shopping cart to have a store on line. We had nexus with Alabama, Mississippi, and Georgia, because of the fact that we send salesmen to the area once in a while. The products that we sell on line, even though it is industrial, it is not the kind of product that our salesmen tries to sell when he goes to these states. Are we obligated to collect tax from those states?

    • Hi Tessa,

      I know it’s a pain, but if you have nexus in a state for one activity, it applies to all of your business activities. I can’t give you concrete advice but it sounds like you’d need to charge sales tax to your buyers in Alabama, Mississippi and Georgia through your online store. If you have developer resources our SmartCalcs Sales Tax API can help (www.TaxJar.com/SmartCalcs). There’s also a TaxJar app for the major online shopping carts and platforms that will help you collect the right amount in multiple states. Let me know what platform your’e selling on and I can point you in the right direction.

      Also, for advice from a vetted sales tax expert, here’s our list: http://www.taxjar.com/sales-tax-accountant-directory/

      I hope this helps!

  • 1956_Was_A_Good_Year

    I live in Illinois and buy an item on ebay that lists the seller’s location as “multiple locations”. I contact the seller to ask about this and he claims his business has a “presence” in Illinois and this is why he is able to charge the sales tax. However, the item ships from Tennessee and the added tax rate is that of Tennessee. Any quick thoughts?

    • Hi there,

      It sounds like he likely does have sales tax nexus in Illinois. Maybe he has a store there, an employee, uses a warehouse there, etc. and that means he has to charge sales tax to IL sales tax. Here’s way more about nexus so you can see the complexities some sellers have to face: http://taxjar.wpengine.com/sales-tax-nexus-definition/ I hope this helps!

      • 1956_Was_A_Good_Year

        The problem is, I live in Illinois and he’s charging Tennessee sales tax – where the item is being shipped from. There’s no telling where he, himself, is located.

        He’s collecting Tennessee sales tax from an Illinois resident – what’s wrong with that picture?

        • Carmen Bonilla

          Like Tax Jar mentioned it multiple times, the seller can and has to charge tax on Illinois if he has any part of the business in your state and you live there. It happens all the time with companies with presence in multiple states. Try buying somethin on line from Walmart. Regardless os where the product comes from, they will charge you tax. The way I see it, he charged you the wrong amount of tax, which for your benefit was lower, but he had to. I run a business on-line, and people ask me about this all the time. Unfurtunately, ther is nothing I can do about it

      • 1956_Was_A_Good_Year

        Sorry, it does not help. You aren’t grasping the situation.

        I wouldn’t have a problem with this if he was charging Illinois sales tax (7.25%) and was shipping the item from Illinois. But he is not doing this. He is charging Tennessee sales tax (7%) because he is shipping from Tennessee.

        I live in Illinois, not Tennessee, and therefore, am not subject to pay Tennessee sales taxes.

        • I understand now. He’s charging the incorrect amount of sales tax. (Sales tax is really complicated any many merchants don’t understand it.) That said, if he has sales tax nexus in Illinois, he should be charging you the Illinois sales tax rate at your ship-to address regardless of where the item ships. I hope this helps now.

          • 1956_Was_A_Good_Year

            Whether or not he has a nexus in Illinois shouldn’t make a difference. No part of the transaction involves Illinois commerce. The company originates in Kentucky and they ship out of Tennessee.

            You can’t collect sales tax for the same item in more than one state. The sale of the item affects either Kentucky (where the main facility is licensed) or Tennessee (where he ships from).

            The only way Illinois would be involved is if any part of the transaction involved an action of some sort within the state of Illinois – other than receiving the item. If it were taxable to just receive the item in a state, then he should be required to have a nexus in every state.

          • While that sounds logical, sales tax isn’t always what you and I would call logical. So unfortunately that just isn’t the case. If the seller has nexus in IL, he has to charge IL sales tax nexus. We actually wrote an entire blog post about this: http://taxjar.wpengine.com/got-sales-tax-nexus-item-ship-from-location-is-irrelevant/ Good luck to you.

  • Naveed Asghar

    I have registered business in California and sell on amazon. After visiting Taxjar I came to know I have to collect sales tax only from CA state customer. But, I have collected sales tax from every state mentioned in amazon seller’s account. I only have CA’s irs no. that placed in every state’s column, for the purpose of sales tax collection. Now please advise me what I do with collected sales tax , I think I never have Nexus with every state except CA. After visiting Taxjar I’ve changed my tax settings on amazon and Now amazon is collecting Sales tax from CA’s Customer only..

    • Hi Naveed, I see that you had an answer through TaxJar support. I’ll let them handle that there for your privacy.

  • Jphere

    Do i have to declared the total of sales including out side texas? or just declared the sales taking place in texas? exp: gross sales 40k but in Texas only 10k taxable = 10k, so put in the form in gross sale the 40k or the 10k?

    • Hi There,

      Most states allow you to do either, you just need to be able to back up that that is the correct number. I hope this helps!

      • Jphere

        I mean I live in Texas but I did declared only what i sold in Texas I didnt add what i sold in other states.

        • Most states will take the return whether you enter your in-state sales or ALL of your sales. If they come back asking questions, though, you just need to be able to prove that those were your sales (either in-state or all sales) through good recordkeeping.

  • Lnwalker

    If I sell things online and just to friends etc do I have to a tax Id number? I don’t make anything from selling the stuff. I just do it to pass time.

  • David Anderson

    Thank you for your fantastic articles. Question, if I have small amounts of inventory in different states (Amazon warehouses) and sell out of products in a state would you suggest that I stop collecting and remitting sales as soon as I run out of inventory in that state? I could see the pain of stopping and starting all the time as soon as inventory no longer exists one month and then the next month there is inventory back in stock.

    • If I were in your shoes, I wouldn’t do that. The pain of telling the state you’re filing your last return and cancelling your sales tax permit and then applying for a new one would be prohibitive. Especially when it’s likely that Amazon will send your inventory there again. Also, some states have trailing nexus, which means they consider you to have nexus in the state for a few months or even a year after your nexus-causing activity in that state has ceased.

      One thing I recommend is that, before you even apply for a sales tax permit, assessing your risk. This blog post will shed more light: http://taxjar.wpengine.com/when-register-sales-tax-license/

      I hope this helps!

      • David Anderson

        Thank you, that’s what I figured would probably be best. I already have sales in almost every state that I have nexus already so I need to work on getting permits like the article suggests.

        I am going to the page that says “Your States with Nexus” and the ones with the “A” icon would be the right ones to start collecting permits correct?

        • Hi David,

          That’s right. Those will be the states where you’ve had items ship from in the past 30 days. I hope this helps!

        • Hi David,

          That’s right. Those will be the states where you’ve had items ship from in the past 30 days. I hope this helps!

      • David Anderson

        Thank you, that’s what I figured would probably be best. I already have sales in almost every state that I have nexus already so I need to work on getting permits like the article suggests.

        I am going to the page that says “Your States with Nexus” and the ones with the “A” icon would be the right ones to start collecting permits correct?

    • If I were in your shoes, I wouldn’t do that. The pain of telling the state you’re filing your last return and cancelling your sales tax permit and then applying for a new one would be prohibitive. Especially when it’s likely that Amazon will send your inventory there again. Also, some states have trailing nexus, which means they consider you to have nexus in the state for a few months or even a year after your nexus-causing activity in that state has ceased.

      One thing I recommend is that, before you even apply for a sales tax permit, assessing your risk. This blog post will shed more light: http://taxjar.wpengine.com/when-register-sales-tax-license/

      I hope this helps!

  • David Anderson

    Thank you for your fantastic articles. Question, if I have small amounts of inventory in different states (Amazon warehouses) and sell out of products in a state would you suggest that I stop collecting and remitting sales as soon as I run out of inventory in that state? I could see the pain of stopping and starting all the time as soon as inventory no longer exists one month and then the next month there is inventory back in stock.

  • proguy

    hi i don’t stock inventory, i buy deals from internet only sellers in new jersey where they dont charge sale tax, and i sell across usa .
    my questions is am i liable to collect sales tax from customers based in new york? or california?i dont have a reseller permit either as just started a month ago.Also one of my e store is wine store as a dropshipper only, so how do i collect sales tax on wine sales?

    • Hi there,

      It sounds like you have a pretty complicated situation, so I’d suggest contacting a sales tax pro: http://www.taxjar.com/sales-tax-accountant-directory/

      That said, this guide might help. http://www.taxjar.com/guides/intro-to-sales-tax/
      Basically, in the U.S., if you have sales tax nexus in a state then you’d charge sales tax to buyers in that state. If you don’t have nexus, then you wouldn’t. Things like drop shipping can complicate this a little bit, but the guide I linked to should get you started. Good luck!

  • proguy

    Also to add i am a member in a usa llc registered in south dakota, am a non usa resident ,so in case this changes anyhting please guide

  • Steve Gregg

    I ghostwrite original articles for clients anywhere in the U.S. I work from California. Do I need to charge sales tax anywhere or to clients in California??

    Also, I invoice through paypal. Does TaxJar support Paypal invoicing?

    • Hi Steve,

      TaxJar does integrate with PayPal. That said, since you perform a service then you probably don’t need to charge sales tax. (CA doesn’t consider ghostwriting services taxable as of now, and you only need to charge sales tax to customers in states where you have sales tax nexus/significant presence.) That said, more and more states are taxing services in an attempt to make more money through sales tax so I recommend keeping an eye on the sales tax climate.

      • Steve Gregg

        Thank you. That’s very helpful information and it syncs perfectly with another source i was using to resolve this question.

        Have great day. We’ll be doing business soon anyway on another business i am starting.

        • Very happy to help, Steve. Just let us know how TaxJar can help you with your future business!

  • RR

    I sell small leather goods and I operate as a sole proprietor. I don’t have a physical business address because I sell online. Do I have to charge a sales tax for people in my state?

  • airfoil55

    In the state of Washington. We have a short-term business plan that would resell product online for about six months. If we do not acquire a reseller permit and pay sales tax to the wholesale provider, are we still required to collect sales tax from Washington State customers – considering that sales tax has already been paid to the state?

    • Hi there,

      Yes, think of sales tax as on the transaction rather than on the item. It doesn’t matter if you paid sales tax when you buy it, if you are selling a taxable item at retail to customers in a state where you have sales tax nexus then you need to charge sales tax on that sale.

  • Mtom

    I have nexus in CA. And business office in Nevada. Do I need to apply for State Tax in CA.

  • Pingback: What Does California’s New Amazon Fulfillment Center Mean for Online Sellers?()

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