Sales and use tax is extracted from the absorbed gross receipts and pay to the department of revenue.

Filing frequency of sales and use tax is determined based on the sales volume and sales tax liability. High volume sale pays sooner than low volume sale. Department of revenue determines filing frequency of sales tax and notify to taxpayers prior to due date.

How to calculate sales tax on the taxable items?

Summarize outright gross revenue and then split taxable and nontaxable sales.

Apply sales tax rate on the taxable items and reconcile how much sales tax was originally collected from buyers on taxable items. Any overpaid or underpaid sales tax is adjusted before filing sales tax returns to the revenue department.

Record-keeping of sales and use tax is essential to present to the state auditors if requested by the revenue agency to show transparency of collection and paid sales tax.

An eCommerce website develops a condition to calculate sales tax based on state, city and county to differentiate between sales and use tax.

Drop Shipping Sales Tax: A drop shipper is a third party who full fills or cater the customer demand. A drop shipping is a lucrative and profitable business model which stands for "Don't let the client go". An advertiser or vendor collects orders and forward to other vendors to deliver buyers.

A drop shipper is a retailer, wholesaler and manufacturer who generally collects sales tax from buyers and directly pay to the state as a vendor.

An understanding is made to collect sales and use tax between a person who originally collects order and pass on to the third party to full fill. Though, drop shipping seems a very remunerative business model, but it is very complex and twisted and sales tax is applied very carefully based on the nexus.