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We have an office in the state that purchases all supplies for resale but we have the items drop-shipped. What tax rate should we be charging?

Full Question: I have a question in regards to what tax rate should we be charging to our customers/clients. We have an accounting office in the state that purchases all supplies for the film/t.v. productions as resale and we have the items drop shipped to the production location. Do we invoice clients the appropriate tax rate where the supplies are being drop shipped to or can we charge them the tax where our acctg. offices are located since that is where the invoicing occurs?

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Answer:

Diane Yetter photoThe tax should be computed based on the ship to location if you are shipping goods. The location of your accounting office where invoicing occurs usually is not relevant unless you are shipping goods within the same state and the state is one of the few that are considered "origin" states which means the local tax rate is based on the ship from or order acceptance location. However, this only applies in a few states like IL, MO, TN, UT, OH and a few others and only if the seller and buyer locations are in the same state.

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