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In the US, a company has to charge sales tax to any end user customers in states where the company has "Nexus" which means a physical presence. Hardgoods at a fulfillment location would qualify as a physical presense or "Nexus".
Also since you have "Nexus", you would also be required to comply with that states business regulations and any othewr taxes that may be applicable like business income tax.
Now saying this, our drop shipper is in a low population state and we get very little customer buisness from this state, so if the state ever came collecting over Nexus, then our exposure would be small.
If you are just staring out, I wouldn't worry about foreign tax law. However as you get bigger you may have to start to worry about these things.
If your drop shipper is in Delaware, Alaska, Oregon or Montana, these states have no state sales tax, so this is not an issue.
The IRS does not consider "Drop Shipping" from a US supplier business presence.
So if you are just drop shipping, then there are no IRS related issues, and you are not liable to the IRS for taxes.
If we are splitting hairs, there is one other tax liability issue. Some cities and municpalities in the USA charge a surtax on the state tax, and this could create a liability.
I rememeber a few large US cities in the USA were trying to go after the large travel companies (expedia, etc)for these taxes. Of course the travel companies are fighting this, and I don't know the status of this in court.
joined:Oct 25, 2005