I am investigating selling some products on the internet which we currently sell in a brick and mortar in Norman, Oklahoma. I am aware that I will have to charge state sales tax on internet sales to people in Oklahoma. My question is, if someone from, say Tulsa, Oklahoma purchase an item from me, in addition to the state sales tax, do I also collect the Tulsa local sales tax or Norman local sales tax, or no local at all but simply the state tax?
Sales taxes are creatures of STATE TAX law, and are probably different in each state that has one. Nevertheless, I believe the usual rule is that the shipping address of the recipient is what controls the tax rate charged. I'm sure that you can obtain a more exact answer by contacting the agency to which you pay your "brick and mortar" taxes, and asking them what the protocol is.
Generally the rule with sales tax is that you only need to charge sales tax for areas in which you have a physical location or employees. So if all your assets and personnel are in just one town of one state, you only need to charge sales taxes to people who you deliver to in that state.
If the state has different taxes in different localities (California does that, too) the same rule may well apply
- at least that's the way it was done here the last time I checked. Outside your own municipality you'd charge the state tax but not the local tax of the other city.
But check with your own state's taxing authority. They should have rules on all this.
Stu
The rule is that you collect all sales taxes for the point of delivery (if you have nexus in that state, which you do), including the local. Some jurisdictions have you remit everything to the state and some (for instance, a few cities in Alabama) make you report and remit separately to them. You'll need to check with the taxing authorities about that.
New York is different; a seller in New York City collects sales tax for each locality in New York State that he ships to. Seth
Oklahoma uses a destination rule for local taxes, as required by the Streamlined Sales Tax Agreement, of which it is a member. You collect the local tax for the Oklahoma local jurisdiction to which the property is shipped. See the Oklahoma Sales Tax Information Packet, available at
In California, the seller is required to collect the district tax only on sales delivered in or shipped to an address in a district where the seller is "engaged in business," which includes making regular deliveries into the district in its own vehicles. For sales delivered or shipped to a district where the seller is not engaged in business, the seller is required to collect only the statewide rate of 7.25%. However, the seller may, as a courtesy to its customers, collect and pay over the district tax voluntarily. Otherwise, the purchaser is liable for the district use tax. Katie in San Diego
Interesting to see your comment about Alabama jurisdictions. In fact not only the state Dept of Revenue and certain cities to which you alluded are on the take, but a third outfit, Alatax, collects for many cities and counties. It's a real hodgepodge, believe me. Now as for what tax to collect, only the state sales tax is collected for out of state sales IF one has nexus in that state. For example yesterday I ordered Hickory Farms assortment for my daughter in Florida. Their sales tax chart lists the various states in which they must collect, GA 4%, AL 4 and Florida 6%. Even though I'm not in FL, that's the rate I'll pay. ChEAr$, Harlan Lunsford, EA n LA
As does a NY seller who is not in NYC.
-- Vic Roberts Replace xxx with vdr in e-mail address.
Very much a hodgepodge, not just Alabama. The last place I worked we were registered resellers in all 46 states & DC. The reason I mentioned Alabama is that Huntsville told me we had to collect city sales tax. We had no office there. I had similar experiences with auditors from other states, notably Ohio and Texas, where the state collects for localities. No offices there either. Disagreeing with them became too expensive. David in San Diego
California doesn't require the seller to collect the local district tax unless it is "engaged in business" in the district. But all the states that have joined the Streamlined Sales Tax Project have had to move to a "destination" rule for local taxes, if they didn't already. You collect the tax for the jurisdiction to which the property was shipped, whether or not you have a presence there. "Nexus" rules apply in the interstate commerce context, as a requirement for a valid tax under the dormant commerce clause rules set up by the U.S.Supreme Court. There is no such constitutional requirement for INTRASTATE commerce, unless it happens to be in the state constitution. A remote seller (internet, mail order, telemarketing) cannot be required to collect the state's use tax unless the seller has a physical presence in the state. But once you have that, you can be required to collect the local tax for any local jurisdiction within that state. Disagreeing with auditors from destination-rule states is not only expensive, it's futile. Katie in San Diego
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