Sales and use tax is charged to every buyer who is buying taxable items either from an out of state or within the state vendor.
Who is an out of state vendor?
A person or company who does not have a physical presence in a buyer's state and supply goods other than the buyer state is known as an out of state seller/vendor.
What is the qualification of Nexus or Physical Presence of business to collect sales and use tax?
A sales tax is register in a state where the business has a physical presence which is also referred "Nexus". A nexus is described a connection between persons, businesses or elements.
Described below the basis to identify if a business qualifies for a local presence.
-
An owner owns a property in the state where the business is started.
-
If a business owner regularly making merchandise deliveries.
-
A business owner provides repair services.
If an item is sold to a customer in another state and business does not have nexus, sales tax is not collected. However, the customer is directly responsible to pay sales and use tax to the department of revenue/division of taxation if the items are subject to collect sales tax.
Businesses are encouraged to voluntarily register with their market states to collect sales tax from out of state customers.This practice helps prevent customer receive a bill from another state for use tax, penalty and interest notifications.
