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AttyHeather, Attorney
Category: Business Law
Satisfied Customers: 677
Experience:  Attorney with 15 years experience
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This is a sales tax question. I have a Nevada corporation

Customer Question

This is a sales tax question. I have a Nevada corporation (an LLC) with a Nevada sales tax license. I'm going to start selling products, some in Nevada, but some for delivery to customers in other states like California and New Mexico and others. I know I need to collect Nevada sales tax for the Nevada sales, but what are my obligations for the online sales with deliveries to states where I have no sales tax license? Thanks.
Submitted: 1 year ago.
Category: Business Law
Expert:  AttyHeather replied 1 year ago.
Hi, My name is*****'m an attorney with 15 years vigorous courtroom practice experience, and I would like to assist you in answering your question. My response is for information and education, and not as legal advice and we do not form an attorney/client relationship.You would not collect sales tax on sales shipped out to other states, so long as you do not have a physical presence in the buyer's state, or a "nexus" with the buyer's state (a nexus with the buyer's state is generally established by you having contact with the state, such as having a shipping warehouse in the buyer's state). The buyer in his or her state (not Nevada) would be responsible to pay the tax due to their state taxing authority, and it would be called a use tax rather than a sales tax.Generally, a state can tax only as far as its borders. This means Nevada does not have the authority to impose its sales taxes on sales that are being consumated/completed in other states. Since states can tax only sales within their borders, there is a loophole in which a state's residents may avoid paying a state's sales tax by purchasing outside the state (by physically going to another state, or by purchasing over the internet from a seller that is not located in the buyer's state and does not have a physical nexus with the buyer's state, such as a storage shipping warehouse). To close this loophole, each state, including Nevada, that has sales tax also has a corresponding "use" tax, in which the buyer is supposed to voluntarily pay the use tax him/herself after purchasing the out-of-state product. As such, if you ship products to buyers out of your state of Nevada, the tax due would be use tax and it would be owed to the buyer's state. Nevada would not be owed the tax, because it lacks jurisdiction to impose tax on a sale completed in a different state. I hope that I have provided useful assistance this evening. Please respond and let me know, and I would especially be grateful if you could provide me with a positive rating so that I am credited for this answer.Best in your business endeavors,Heather S, Attorney

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