Reseller Certificate and Sales & Use Tax?

[olimits7]

Hi,

I've been doing some research regarding charging sales tax to my customers. And it seems like, from reading online, that I don't have to charge sales tax if I don't have a presence in that state.

All my wholesalers are asking me to send them my reseller certificate; so they can sell me products without charging me sales tax.

So my questions are:

Do I have to pay "use" tax myself when I file my return at the end of the year since my wholesaler didn't charge me any sales tax due to my reseller certificate? Then in turn I will not charge customers living out of state any sales tax.

Or do I not need to pay for sales tax at the time I buy from my wholesaler? Then in turn I will not charge my customers out of state any sales tax.

Thank you,

olimits7

[olimits7]

Hi,

Thanks for the article aukdesign, it was good.

From reading the article it talks about that a "wholesaler" doesn't have to charge tax to a "business customers" with a resale certificate...ok this is clear to me.

But I'm still confused on if I'm the "business customer" who just bought these tax free products from a "wholesaler"; do I have to pass the sales tax to all my end-customers? Or to just end-customers that are located within my business state?

Thank you,

olimits7

[edited by: lorax at 3:44 pm (utc) on Aug. 27, 2008]

[T_Miller]

Always check with your state's Sale Tax Authority...

But in general, with your resell certificate you can purchase **inventory for resale** without paying sales tax.

You then sell that merchandise at retail and collect sales tax from customers in your state. You then file and remit the tax collected to the state.

Laws & procedures vary from state to state and for local sales taxes as well. ALWAYS consult the proper authorities.

[olimits7]

Thank you for your reply T_Miller.

I will check with my state's Sale Tax Authority to see what their procedures are.

You then sell that merchandise at retail and collect sales tax from customers in your state. You then file and remit the tax collected to the state.

So based on what you said above, I don't have to collect sales tax from out-of-state customers; only the states I have a business physical presence in; correct?

Thank you,

olimits7

[T_Miller]

Yes, that's the quick answer.
I'd suggest a google search for "sales tax nexus".

I'm not a tax lawyer or CPA, but I have stayed at Holiday Inn Express recently. ;>)

[olimits7]

Thank you for your reply. I posted this on another forum and I got a pretty good reply from someone so I just wanted to share it with everyone:

I will still talk to a professional, but this guys answer was very helpful:

So my question is if my wholesaler sells me the products I order with NO sales tax included using my “resale certificate”; do I still need to collect “use tax” myself and submit payment to NJ even if the products are not for use in NJ?

The answer is no. NJ classifies internet retailers as being the same as catalog sellers. You do not have to pay sales or use tax on inventory, even if that inventory is for out-of-state sales not subject to NJ sales tax.

olimits7

[edited by: lorax at 12:17 pm (utc) on Aug. 28, 2008]
[edit reason] edited for minor fair use [/edit]