If the item is shipped to the customer, then tax applies for the delivery state, whether that is the same state where the seller is located or a different state. Sellers should collect sales tax only if they are registered to collect sales tax in that state.

Some items are exempt from sales and use tax, including:

• Sales of certain food products for human consumption (many groceries)
• Sales to the U.S. Government.
• Sales of prescription medicine and certain medical devices.
• Sales of items paid for with food stamps.

In a destination-based state, sales tax is collected based on the buyer’s location. That means you collect sales tax based on your customer’s state and local tax rates. You also remit the tax to your customer’s state and locality.

eBay announcement follows: Beginning October 1, 2019, eBay will collect sales tax on applicable transactions for buyers in Arizona, California, Colorado, Maine, Maryland, Massachusetts, Nevada, North Dakota, South Carolina, Texas & Utah. For states that we are collecting tax, you do not need to take any action.

Sales within origin states In the case of California, if you are based in that state and make a sale to another location in California, any city, county or state taxes will be based on the seller’s location (origin), while any district sales taxes will be based on the customer’s location (destination).

What is Sales Tax Nexus? Nexus is the connection a business has with a state or taxing jurisdiction. If there is no connection between the jurisdiction and the company, the business is not required to adhere to the jurisdiction’s sales tax rules.

California. California’s threshold for economic nexus is $500,000 in sales based on the previous or current calendar year’s sales. Sellers who reach this threshold must collect and remit sales tax in California and register with the state.

Sales tax is used to pay for state and local budget items like schools, roads and fire departments. Many areas rely on sales tax to fund their budgets, so they are very serious about collecting all the sales tax they are owed.

A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow the seller to collect funds for the tax from the consumer at the point of purchase. When a tax on goods or services is paid to a governing body directly by a consumer, it is usually called a use tax.

Excise taxes are independent of income taxes. Often, the retailer, manufacturer or importer must pay the excise tax to the IRS and file the Form 720. They may pass the cost of the excise tax on to the buyer. Some excise taxes are collected by a third party.

Specific Tax – refers to the excise tax imposed which is based on weight or volume capacity or any other physical unit of measurement. Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles.

Products and services that governments wish to discourage or limit face excise taxes. These include tobacco, alcohol, firearms and gambling. Excise taxes levied for this purpose are often called “sin taxes.” Similarly, governments use excise taxes to help cover costs related to the taxed item.