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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 694
Experience:  CPA experienced in tax and financial planning
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We have a company out of Baltimore with no real office. Initially,

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We have a company out of Baltimore with no real office. Initially, we were told that we only have to collect sales tax on retail sales to end users if the buyers are in Maryland, but have recently been told that 24 other states expect sales tax on internet sales. I need to know if this is true.

Also, if I sell to a store in MD at wholesale prices, and they then sell it retail, it's up to them to get the tax, as long as we get a copy of their resale tax license. Is that correct?

When we sell to stores out of state, we have not been collecting tax on our wholesale orders to them. Do we have to? If they have a resale tax license, would that make the transaction from being exempt from us having to put the tax on the order?

More importantly, where would we go to get this information spelled out to us so we know what we have to do as I don't know the tax rate for any other state in the country other than MD.
Submitted: 3 years ago.
Category: Finance
Expert:  DanielleCPA replied 3 years ago.

DMC :

Hi and welcome to Just Answer! I'm happy to help answer your Finance questions. Feel free to interject at any time if you need clarification.

DMC :

Please give me a few moments to type out your answer and properly address your question.

DMC :

First, you are correct in not collecting tax when you sell to a reseller. Getting a copy of just the resale license typically would not be sufficient evidence if you were audited for sales tax. You should have a reseller's certificate on file. Here is a link to a sample of a reseller's certificate from Maryland's website. http://business.marylandtaxes.com/taxinfo/salesanduse/salesrecords/resalecert.pdf

DMC :

Second, if you have out of state customers who are similar customers, collect resellers certificates from them as well, just to cover yourself. While these sales would typically fall under the category of interstate commerce and would not be taxable for MD sales tax purposes, this is an added layer of protection, especially if you other states are looking at taxing you.

DMC :

Third, you are only required to collect tax from online sales in states with which you have nexus. Nexus can be quite complicated and varies from state to state, but typically things like having a location in a state, having employees or sales reps in a state, or owning property in that state would create nexus.

DMC :

Currently, no states require taxes on Internet sales when you don't have nexus with that state, although some states such as New York have a very broad definition of what constitutes nexus.

DMC :

You are referring to a bill proposed in Congress referred to as the Main Street Fairness Act. This bill would allow states that are part of the Streamlined Sales Tax Project (a project of which 24 states are currently part of that aligns sales tax rules across member states) to charge tax on Internet sales. This bill was proposed in Congress in 2010 but has not been passed. I cannot speak to the likelihood of it being passed, but more information on the bill can be found here: http://www.opencongress.org/bill/111-h5660/show

DMC :

While you don't need to collect sales tax on out-of-state Internet sales at this time (unless you otherwise have nexus), In the event that you do need to collect sales tax for multiple states, the sales tax rates can be found easily on those various states websites.

DMC :

If you have any follow-up questions, please let me know and I will gladly answer them. If not, then please hit the green accept button to indicate I answered your question.

Customer:

I think you did a great job but I can't print out the info you gave me in this format. I can't copy and paste it either. Can you suggest how I can print out this info? In the usual just answer format where we're asking questions back and forth, I can just click the print button. In thi format, after the paragraph that starts Third, I can't print out.

DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 694
Experience: CPA experienced in tax and financial planning
DanielleCPA and other Finance Specialists are ready to help you
Expert:  DanielleCPA replied 3 years ago.
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Expert:  DanielleCPA replied 3 years ago.
Thank you. You'll be able to copy and paste the answer now.

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