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I started an online shop. My drop-shippers required me to obtain a Resale Tax certificate. I thought on-line stores don't charge sales tax? Is this right?

Full Question: Hello, I am starting up an online retail shop. I was required by several drop shippers to obtain a Resale Tax certificate before they would sell to me. I am confused though... I thought online stores do not charge sales tax to customers? I live in Arizona, but my LLC is registered in Florida along with my resale cert. Can you please clarify what I am supposed to do? Do I charge taxes to customers or not? If not, do I still report -$0- on taxes to Florida every quarter? I am nervous and do not want to mess things up. Thank you so much!

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Answer:

Diane Yetter photoRetailers are required to collect sales tax on sales into states where they have established a presence as defined by state law. Based on your explanation, it sounds like you have presence in AZ (where you are located) and probably also in FL (where you LLC is registered). You may also have a collection registration requirement in other states depending on your relationship with your drop ship fulfillment agents. Once you have established presence, then you must register with the state as a retailer. This will allow you to provide a resale certificate to your suppliers to avoid them charging you tax. You then are required to charge tax to your customers in the states where you are registered on taxable products and services. Just because you are an internet merchant does not mean your sales are not taxable. If you are selling physical goods that you have shipped to the customer, then you need to determine if there is any exemption that might apply. If not, you have to charge the tax and remit it to the applicable state. You should not collect tax in states where you are not registered as that is considered fraud. If you have already registered in FL, you have an obligation to pay the FL sales tax on any sales to FL customers even if you have not collected it from your customer. If you need further assistance, we are available to provide consulting services. If this of interest, please feel free to contact us.

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