eBay, dropshipping, and sales tax
May 3, 2007 · Print This Article
Many eBay sellers use dropshippers to sell/deliver products. A reader recently asked if she was required to collect sales taxes on items shipped to the same state her dropshipper is located in, if she does not live and operate her business in that same state.
For example, lets say your dropshipper is located in Texas, but you live and operate your business in Florida. A customer in Texas purchases an item and it is delivered to Texas from the dropshipper in Texas. Do you need to collect Texas sales tax on this transaction?
This is a gray area, and I wouldn’t be surprised to see it change in the future. But for now, you pay sales tax on items that you ship to the state where your primary business is located. So if you live and operate your business in Florida, you only pay sales tax when you ship items to customers in Florida.
Your dropshipper in Texas may try to charge you sales tax for orders that are placed in/shipped to Texas because their warehouse is located in Texas (and therefore they are subject to Texas sales tax laws). To avoid this, you should get a resellers certificate and supply it to your dropshipper.
However, every state has different sales tax laws, so for additional information you should contact your state’s department of revenue.
For more great eBay tax tips, please read our free special report, Tax Tips for eBay Sellers.
Tags: ebay tax, sales tax ebay, sales tax dropshipper
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