When is a trade or business required to collect sales tax?
A trade or business that sells goods to the public is required to collect sales tax if there is a sufficient connection between the business and the state to support the state’s imposition of a registration and collection requirement. The connection sufficient to support the requirement to register and collect the tax is called nexus. A seller with an office, manufacturing facility, or retail outlet within a state is clearly required to register with the state and collect the requisite sales tax. Nexus has also been found to exist if a seller has employees, agents, or other offices involved in unrelated businesses within a state. The question of whether a seller is required to collect sales tax, however, becomes more problematic when the seller does not have any tangible presence within a state but merely solicits sales within the state through the use of catalogs or web sites and ships goods by common carrier within the state to customers who have purchased goods.
A trade or business that sells goods to the public is required to collect sales tax if there is a sufficient connection between the business and the state to support the state’s imposition of a registration and collection requirement. The connection sufficient to support the requirement to register and collect the tax is called nexus.
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A trade or business that sells goods to the public is required to collect sales tax if there is a sufficient connection between the business and the state to support the state’s imposition of a registration and collection requirement. The connection sufficient to support the requirement to register and collect the tax is called nexus. A seller with an office, manufacturing facility, or retail outlet within a state is clearly required to register with the state and collect the requisite sales tax. Nexus has also been found to exist if a seller has employees, agents, or other offices involved in unrelated businesses within a state. The question of whether a seller is required to collect sales tax, however, becomes more problematic when the seller does not have any tangible presence within a state but merely solicits sales within the state through the use of catalogs or web sites and ships goods by common carrier within the state to customers who have purchased goods.
Related Questions
- What is the difference between the taxation of income that is effectively connected with a trade or business in the United States and income that is not effectively connected with a trade or business in the United States?
- When is a trade or business required to collect sales tax?
- Does the Federal Government collect state taxes?
