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Do I need to charge and remit Sales Tax?
PowerUp




msg:3622746
 3:47 pm on Apr 9, 2008 (gmt 0)

Hi, I am from an Asian country. I don't have a US business license. I'm setting up an online store. My dropshipper is based in US, California. Do I need to charge and remit sales tax? If yes, is it only for customers in California?

 

tootalldave




msg:3622885
 6:19 pm on Apr 9, 2008 (gmt 0)


You really need to talk to your dropshipper as he will be responsible
for the actual local state taxes
As if your dropshipper has to pay sales tax, he will want to pass the cost on to you.
In some states if you don't have a physical presence you are not responsible for local taxes as you are not using state resources.
But, there is a fine line that needs to be followed.

The way it works is:
California buyer
California Seller
California Delivery

There are many varibles to this that state goverments, IRS and individual sellers will firmly disagree with, you will find you will receive conflicting answers from different sources.

This is just a bit of experience talking and in know way would I suggest that you take it as solid advice...

PowerUp




msg:3623578
 1:48 pm on Apr 10, 2008 (gmt 0)

You really need to talk to your dropshipper as he will be responsible
for the actual local state taxes
As if your dropshipper has to pay sales tax, he will want to pass the cost on to you.
In some states if you don't have a physical presence you are not responsible for local taxes as you are not using state resources.
But, there is a fine line that needs to be followed.

The way it works is:
California buyer
California Seller
California Delivery

There are many varibles to this that state goverments, IRS and individual sellers will firmly disagree with, you will find you will receive conflicting answers from different sources.

This is just a bit of experience talking and in know way would I suggest that you take it as solid advice...

In my case,
Buyer delivery address in California
Seller in Asia
Dropshipper delivers from California warehouse

All the while I thought if the SELLER and BUYER are from the same state, so sales tax will apply. I didn't know that the law follows the DROPSHIPPER state and BUYER state.

I wish somebody could clarify.

Corey Bryant




msg:3624941
 9:06 pm on Apr 11, 2008 (gmt 0)

Did you start a company in the United States?

Is the dropshipper charging you sales tax? If so, he is paying those taxes for that product. If you pay the state sales tax, the state is getting twice the amount of money for your widget.

Have you asked the dropshipper what he normally does? Chances are he has a few clients who are not based in the United States and might have some opinions as well.

The sales tax is usually charged wherever the product(s) come from. So if your dropshipper had something in Washington and Washington had state sales tax, then there would be a charge there.

What does your accountant say to do?

[edited by: lorax at 10:41 pm (utc) on April 11, 2008]

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