- Drop shipping involves a vendor shipping products directly to your customer and billing your company, resulting in two simultaneous sales.
- The first sale is from the vendor to your company (usually a sale for resale), and the second is from your company to the end customer (a taxable retail sale).
- Sales tax responsibilities depend on whether your vendor or your company has nexus in the customer’s state.
- Proper resale or exemption certificates are needed to avoid unnecessary sales tax charges.
- Different scenarios exist based on which parties have nexus in the destination state, affecting sales tax obligations.
Source: taxjar.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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