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I have a question about sales tax as it pertains to an

Hi I have a question...
Hi I have a question about sales tax as it pertains to an ecommerce site. The company is registered and filled in Delaware under the name OFPOISON LLC with a registered agent and we now have an Federal Employee Identification Number.
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Answered in 3 minutes by:
11/30/2017
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,230
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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Customer reply replied 1 month ago
We are dropshopping and have to collect, report, remit all taxes to correct tax authority however since Delaware is a tax haven we believe it also is for sales tax since clothing is considered functional and therefore does not have a sales tax. Delaware also does not have origin Sales tax for items shipped out from there however the issue for is our suppliers will be sending from various locations. The question is how does Delaware work in our favor and what is necessary for us to do in terms of reporting these sales taxes as it is our responsibility to know where it applies and collect these taxes.

Sales tax in the US is a state tax. If you are drop shipping from your supplier's warehouses then their state laws will apply. If that is the case then you need to know the states where the nexus will apply.

How many states are you dealing with ?

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Customer reply replied 1 month ago
We dont have a final number yet and we also have international suppliers in which an import tax applies.

If we could stick to sales tax for now...................

Can you contact the suppliers and see if they have a plan in place to collect and remit this tax or if they are totally hands off?

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Customer reply replied 1 month ago
okay. they are totally hands off

Then once you have your list for the US states where the suppliers are located you can look at their specific state law. Until you have that it is most difficult to try and determine your liability.

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Customer reply replied 1 month ago
it does not matter where we are registered unless we get a fulfillment company in Delware and suppliers send the product there and it leaves from Delaware then can we avoid the sales tax because most of the products will be shipped to the Middle East.

That is correct. The overseas shipments are not counted for sales tax but the individual states in teh US look to NEXUS. For some that just means shipped from their facility in that state.

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You may still have to supply them with resale certificates but no individual state sales tax (for most).

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Customer reply replied 1 month ago
Okay so since delaware doesnt have origin or destiation sales tax then the supplier will only pay the tax to get it out of their state to Delaware?

The resale certificate takes care of that. If you resale (for most states) then no sales tax except on the end sale.

Some people think that the US should work more like VAT for sales but, states like it this way

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Customer reply replied 1 month ago
Okay thank you, ***** ***** which states for have this resale no sales tax
Customer reply replied 1 month ago
which states do not*

I will have to look taht up ( I hope there is a consolidated list) , one moment............................

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Customer reply replied 1 month ago
thank you

I have narrowed it down to at least 10 states that have problems when accepting a resale certificate form an out of state resaler.

Alabama

California

Florida

Hawaii

Illinois

Louisiana

Maryland

Massachusetts

Washington

Washington D.C.

That would at least let you know 10 states to shy away from if possible. Any more research is really out of the scope for this thread.

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Customer reply replied 1 month ago
perfect thank you

You are most welcome.
A positive 5 star rating is appreciated so I am credited for assisting.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,230
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
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Category: Tax
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