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I have another question. My store functions on a dropship…

I have another question. My...
I have another question. My store functions on a dropship basis. Customers order through me and the manufacturer ships directly to the customer. I live in Oregon which has no sales tax. Should I be collecting sales tax for out of state purchases. It seems like there is a lot of debate surrounding this topic. Thanks!
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Answered in 2 hours by:
3/15/2018
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,784
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Thank you for requesting me.

If you do not have nexus (physical presence) in the states where the item is shipped, you are not responsible to collect sales tax in those states.

BUT

Your vendor has nexus in the destination state but your company does not. In this scenario your vendor should be asking your company for a resale certificate that is valid in the destination state. What is valid in the destination state will vary. Many states will accept your company’s “home” state certificate or will accept your “home state” registration number on the certificate issued by the destination state. Some states, however, are very rigid and will only accept a resale certificate from the destination state with a registration number issued by the registration state. If the ultimate customer is not taxable, some states will allow a “flow through” of your customer’s resale certificate. This option is normally available only when your company does not have nexus. Your failure to provide your vendor with the appropriate resale certificate could legally obligate them to charge your company sales tax on the wholesale price of the property based on the tax rate at the destination location.

The following link contains excellent information about this "hot topic."

https://blog.taxjar.com/drop-shipping-scenarios-sales-tax/

Once you review this information, please let me know if I can assist you further.

Thank you and best regards,

Barb

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Just following up with you to see if you have any other questions. If so, please let me know so I can continue to assist you.

Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,784
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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