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Do I charge Sales Tax?

My company is registered and operates in CA. If I sell equipment online to another state like Oregon or Texas, Do I charge them sales tax? Or do I only collect sales tax from CA buyers?

4 Answers

  • Anonymous
    3 years ago
    Favorite Answer

    You are only responsible for collecting sales tax on taxable items or services sold to customers within the state of California. This is because the Supreme Court has ruled that it would be detrimental to small businesses by forcing them to navigate the complex tax codes of multiple states simultaneously.

    However, there is an exception. If your business has what is called a "tax nexus" in a state you are selling to, you would be required to collect a sales tax in that state. A "tax nexus" basically means you also do business in that state, but may not be conducting that specific transaction in that state. For example, lets say you owned a company that sold cell phone cases and you had two warehouse locations, one in CA and one in TX. A customer from TX orders a cell phone case from you but instead of shipping it from Texas, you ship it from CA to avoid having to collect the sales tax. This situation would be illegal because your TX warehouse is considered a "tax nexus" and as such, would require you to collect sales tax on all purchases made from TX customers, regardless of whether you ship from CA or TX. The "tax nexus" laws prevent businesses from taking advantage of a loophole for the collection of sales tax.

  • Adam
    Lv 4
    3 years ago

    You have to determine if you have nexus in those states outside of California. Having nexus would require you to charge sales tax for that state. Nexus rules vary by state, so they can get fairly complex. Generally, if you own property in a state you will have nexus in that state; however, there are other economic factors that might create nexus (e.g. significant sales).

    My suggestion would be to either look up the nexus rules for each state that you do significant business in. Or, if you are not comfortable with that, get an account that specializes in state taxation to conduct a nexus study.

    Note: It is also important to know if you have nexus in a state, because you might be required to file an income tax return for that state. Failing to do so could result in penalties.

  • 3 years ago

    You only collect from California customers.

  • 3 years ago

    If your only nexus is in CA, you only collect CA Sales Tax on goods sold to customers in CA.

    Goods sold outside of CA are not taxable in CA. You need to keep accurate records of those sales.

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