How to Manage Sales Tax When Drop Shipping

• In a drop shipping sale, the retailer sells to the customer but a third-party vendor ships the product directly to the end customer.
• Sales tax responsibility depends on nexus: if the seller has nexus in a state, the seller is generally responsible for collecting and remitting sales tax there.
• If the vendor has nexus in a state and the seller does not, the vendor may be responsible for collecting sales tax.
• Drop shipping creates added complexity because tax obligations may depend on where all parties are located and which states’ rules apply.

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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