|Tax exempt for resellers?|
I have a quick question regarding sales tax.
I have my website registered in NJ under an LLC. I'm currently setting up accounts with my wholesalers, and since I'm a reseller and I have a "nj sales & use tax certificate" I'm able to get the products 'tax exempt' from my wholesaler.
So my question is do I have to charge sales tax to customers outside of NJ or International customers? I'm guessing I just have to charge sales tax in NJ since I have a physical presence in that state, but I'm not 100% sure if this is right.
First, consult with your CPA or a tax attorney for the real scoop in your situation. Any random forum post (mine included) should NOT be relied on for issues like this.
My take, and operating guidelines, is that any order shipping to your home state will require you to collect and pay sales tax. That one is easy.
In some states, just by having a booth at a tradeshow for a couple days in their state during a given year gives you a physical presence in that state. So, now you will be required to pay sales tax on transactions to that state as well. I once worked at a software company on the west coast that was audited by the State of New York (yes, they sent an auditor all the way across the country). Because we had participated in at least one NY tradeshow a year, they ended up collecting sales tax on all NY transactions for the previous five or six years.
And, if do any drop shipping with companies in other states you may have to pay them sales tax on orders to that state. We do very little drop shipping, but, if we did a drop ship from a supplier in Texas to a customer in Texas the drop shipper charges us sales tax (since we are not in Texas and do not have a Texas reseller license). Since we do very little drop shipping we don't collect sales tax on these transactions from the customer - we just eat the cost.
You will not need to collect any taxes on shipments outside the USA.
Althought you will not need to collect tax on international shipments, you should inform your customers on what to expect when their package arrives.
Depending on the value of the shipment, their package may be opened, inspected by foreign customs, and assessed tax (VAT or GST/HST) and import duty. These fees will be paid by the carrier, then collected (COD) when the carrier delivers the package.
Also, the carrier can charge brokerage fees or customs clearance fees to cover their cost of brokering the package through customs, and resealing it after inspection.
You will want to give your foreign customers a heads-up that these fees are coming, and roughly how much they'll be. A suprised customer may refuse delivery, and you my end up on the losing end of a chargeback request, and left paying for shipping, return, and brokerage fees.