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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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when we sell merchdise to Indiana from California, do we need

Customer Question

when we sell merchdise to Indiana from California, do we need to charge our customer sales tax if we don't have any store or office at Indiana ?
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

You do not need to charge Indiana sales tax if you do not have Nexus in Indiana - means you do not have any substantial presence.

 

For California sales tax - if the customer comes to California to pick merchandise - you should charge CA sales tax. If you ship merchandise to Indiana using third part delivery service - you do not need to charge CA sales tax.

see more information in this publication - http://www.boe.ca.gov/pdf/pub71.pdf

 

Let me know if you need any help.

 

Customer: replied 5 years ago.

I don't think you are correct.

Because we just got a collection letter from State of Indiana for sales tax.

 

Expert:  Lev replied 5 years ago.

If you think that I am incorrect and the Indiana DOR is correct - you may simply send them a check.

 

To collect Indiana sales tax - you should register in Indiana - you may not collect sales tax without registration.

If you did registration - Indiana will assume that you are doing the business in Indiana and will expect a sales tax return from your business even if you do not owe any sales tax.

Now because states are short of revenue - they become very aggressive in collection effort.

 

If you do not have nexus in Indiana - means you do not have substantial presence - you do not need to register and collect sales tax - that would be a responsibility of your customer to pay use tax for out of state purchase.

 

You may contact Indiana DOR (NNN) NNN-NNNNor(NNN) NNN-NNNNfrom 8 a.m. to 4:30 p.m., Monday through Friday with your questions about the bill.

 

It is possible that DOR thinks that you do have a nexus and therefore you might required to register.

 

Customer: replied 5 years ago.
I can't verify that until I talk to them. I found their phone # XXXXX line too, so I can't pay you until they answer me.
Expert:  Lev replied 5 years ago.

That is fine with me.. I do not want to charge you unless you are completely satisfied.

 

My main concern is how IN DOR find out about your selling activity.

I suspect that you mistakenly registered with them and now they are sending you a bill.

Or any of your buyers reported that they paid sales tax to you.

Or if you deliver merchandise using your own transportation - that might be considered as business activity.

That what you need to clarify.

 

Please have this for your reference - http://www.in.gov/dor/files/bt-1-annotated.pdf - and see references to code sections.

Retail Sales Tax Account: $25.00 Nonrefundable Registration Fee or Out-of-State Use Tax Account: No Fee retail Sales Tax is applicable whenever selling activities are conducted in Indiana; whenever a business location, warehouse, distribution center exists; or whenever employees solicit or take orders for your products in Indiana (this includes wholesalers). Upon registration for retail sales tax, the Department will issue a Registered Retail Merchants Certificate.

The registration fee of $25.00 is a nonrefundable processing fee and must be remitted with this application when registering for sales tax. Each business location, including manufacturers, per 45 IAC 2.2-8-7, must have a separate Registered Retail Merchants Certificate. A change of ownership

requires a new application to be filed along with the $25.00 fee. For example: A sole proprietor changing to a partnership or corporation is a change of ownership. Retail sales tax rate is 5% (.05).

Out-of-State Use Tax is a voluntary registration available to out-of-state businesses not meeting the conditions listed for retail sales tax. Upon registration for out-of-state use tax, the Department will issue an Out-of- State Use Tax Collection and Remittance Permit. This permit authorizes your business to collect Indiana Use Tax on sales shipped into Indiana. There is no fee associated with this registration.

 

 

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