Difference Between Employer ID Number and State Tax ID Number

What is the difference between an EIN and State ID Number?

Sales and Use tax permit is used to collect sales tax from consumers on taxable goods and services, whereas Employer Identification Number is used to file taxes and hire employees.

Employer Identification is issued by the Internal Revenue Service, whereas State Tax Id Number or Sales and Use Tax certificate is issued by the department of revenue of the state where the business is registered and conducted.

Sales tax is applied to tangible goods and taxable services such as clothing, cars, furniture, household items, and other goods, whereas Employer Identification Number is used to file business taxes such as payroll, withholding and business.

Sales tax id number or sales tax exemption certificate is a legal document which is issued by the state. This certificate gives a business an authority to collect required sales and use taxes from the end users on taxable items.

A sales tax is charged at the end-purchase of a good and provision of services including internet sales. Sales tax is imposed on tangible personal property which is movable.

A seller charges sales tax if it has 'nexus' where it is located. Nexus, or physical presence, is established if a business maintains a temporary or permanent presence of people (employees, service people or independent sales/service agents) or property (inventory, offices, warehouses) in a given locality. There is no over-arching definition of nexus, so each taxing locality may define it differently - and many do, leading to endless problems for businesses which have operations in multiple states.

The Internal Revenue Service does not charge to issue an EIN to a vendor, whereas generally there is a fee to obtain a state tax ID number.

The sales tax id number is also recognized by following mentioned names:

• Reseller permit

• Sales tax vendor id number

• Reseller tax id

• Sales tax permit

• Reseller certificate and

• Sales tax exemption certificate

• Sales Tax Certificate of authority

• Sales tax ID number

• CRS Number

• County vendor license

• General excise tax

What is a similarity between State Tax ID and EIN?

A new Employer Identification Number and State Tax ID Number is issued to a unique business entity and same EIN and State Tax ID is used for the multiple businesses if doing business under social security number or  personal name.