Taxes
Sales Taxes

Sales Taxes

Exceptions are sales to resellers, such as wholesalers or retailers, who have valid state resale certificates. Ask to see the resale certificate of any wholesaler or retailer with whom you conduct business. Another exception is sales made to tax-exempt institutions, such as public schools and libraries. In some states, sales taxes apply only to products, while in other states, sales taxes apply to services as well.

A particularly gray, frustrating, and rapidly changing area is the collection of sales tax by firms that sell products or taxable services in states where they do not maintain a clear physical presence. Physical presence is clear if you have an address, store inventory, or maintain an employee, such as a sales representative, within a state. But individual states have taken out-of-state companies to court for the collection of sales tax based on the presence of mail-order catalogs within their state. Results on these suits have been mixed. But, the definitions of physical presence are changing and bear watching.

If you are making taxable sales in other states, you should check with your accountant or legal advisor for an up-to-date opinion on your particular situation. The safest route, of course, is to simply collect sales tax in every state where you sell products or services.