Sales Tax between States in the USA

Question

Hi we are getting lots of enquiries from the USA for our product. We are thinking of testing the market by just using a fulfillment company in US to store and ship our product.
I understand that once we have chosen a fulfillment company we pay the import duties etc. in that State.

When our website sells the product and the customer is based in a different State to the fulfilment company so it crosses state line.
How do we make sure the difference between States Sales tax is properly paid to the different State?

We were at an event recently where this problem was highlighted as all the states are getting hot on this subject.

Answer

Steve.. Are you selling from the UK and collecting payment there?
If that is the case then you do not need to collect sales tax. The basics are.
If you have a physical presence in a state (Store, office, employees etc) You would need to collect sales tax from that state
If you have no presence in the state, then you do not have to collect sales tax

Here is some information you can look at
http://www.sba.gov/community/blogs/community-blogs/small-business-cents/sales-tax-101-small-business-owners-and-online-

Any questions, please feel free to contact me.

Paul

Answer

Hi Paul
Thank you very much for replying and reading through the SBA page it looks like that.
I thought though that the States have cracked down on this. LL Bean have just been caught haven’t they? They set tp in the cheapest State and were selling all over to the other States and dodging the Sales Tax.

Our Plan is to sell from the UK. The nearest thing to a Nexus is the fulfilment company based in one State.

Does this mean that we have to pay Sales tax in one State as we have rented warehouse space. and all of the others there is no Sales Tax as the company is based in UK.

Answer

LL Bean is a case of someone having a presence in just about every state and not collecting sales tax for their online orders. Say you were set up in New York and had an office there.
If you had no employees working for you in any other state you would only need to collect sales tax from anything sold in New York. If you then hire a sales guy in California. You need to add CA to the list of states you collect tax from. LL Bean are in just about every single state in one way or another. If you are shipping from the UK and just having everything held for shipment somewhere that’s a 3rd party you will not need to collect sales tax still, even in that state. Unless you as a company have a presence there

Menu
Export Action Plan