Sales Tax based on where purchased or where sold?

[851516]

If I purchase items in City A, and sell them in City B, do I charge sales tax according to the rates of City A, or City B?

If I purchase items in County A, and sell them in County B, do I charge sales tax according to the rates of County A, or County B?

If I purchase items in State A, and sell them in State B, do I charge sales tax according to the rates of State A, or State B?

I work in Arizona.

[Freelancier]

You charge based on where the transaction takes place. In most situations, if you're in a different state from the buyer AND you do not have a physical presence (even if it's rented) in that different state, you are not responsible for collecting sales tax for a different state from the ones in which your business resides.

I say "in most situations", because if your company is large enough, the remote state will sue you for not collecting sales tax in their state, hoping you'll settle and start collecting.

[Brian Altenhofel]

It depends on your state. Most states are destination-based when it comes to assessing sales or use tax, meaning that you have to collect the rate for the destination. For example, here in Oklahoma, we have 816 different tax jurisdictions, and some of those have special "tax holidays" and other variables (including different classes of taxable items with different rates). Where I am located, the sales tax rate is 5.5%. But if I sell a product and ship it to someone in Weatherford (just up the road), I have to collect 9.5% from the buyer and remit that to the state.

I get some of my business from people who find their web developer didn't set them up to properly collect sales tax. Some find out from a seminar - others find out when the tax man comes knocking.

Collecting sales tax in other states is optional unless you have a nexus there, but it is considered wise to notify the customer that they are responsible for any taxes due in their state related to that purchase. Alternatively, there are some services that will calculate, collect, and remit sales taxes for any state that you choose. Some have a subscription, some are free, some will indemnify you if they remit incorrectly, and some states even have immunity provisions for people using these services to handle their sales tax collections.

To answer your main question, I think Arizona is origin-based, but just about any accountant who deals with sales taxes in the area should know. Or you could call your local Tax Commission, Dept. of Revenue, or whatever your state calls it.

[Freelancier]

I think Arizona is origin-based

Arizona also has 100+ different tax jurisdictions (many overlapping) and my client there would very emphatically mention that it's where the product goes in Arizona that dictates the sales tax. But once the product leaves Arizona, they don't collect anything, because they don't have a presence in any other state.

[Brian Altenhofel]

Arizona also has 100+ different tax jurisdictions (many overlapping) and my client there would very emphatically mention that it's where the product goes in Arizona that dictates the sales tax. But once the product leaves Arizona, they don't collect anything, because they don't have a presence in any other state.

Right. That's why I added the part about consulting a local accountant or calling the Department of Revenue, because a quick 5 minute Google search limited to the past year yielded conflicting information. The "I think..." was based on running lookups through a tax service using a few randomly picked zip codes.