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We will attend a trade show for one day and sell. Do we collect sales tax?

Full Question: Our company is located ONLY in Palatine, IL. We sell a garden product. We will have a booth for one day this January at a show in Valparaiso. We will be selling retail that day. Are we required to collect sales tax? If so how much (7%?). We have no employees or representatives acting on our behalf in any state.

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Answer:

Diane Yetter photoThe determination of whether your company is required to collect Indiana sales tax is based on your activities in the state and whether they exceed the threshold as set by the state of Indiana. This is referred to as "nexus". A company establishes nexus and therefore is required to collect sales tax on the taxable sales made in the state if they maintain a substantial physical presence in the state either on a temporary or permanent basis through their own people and property of through the use of third party agents operating on their behalf. Indiana has released an Information Bulletin regarding Sales By Out of State Merchants and specifically discusses the activities of a trade show. If an out of state merchant displays merchandise for sale at a trade show in Indiana, this business is deemed to be doing business in Indiana and must register and collect the Indiana sales tax. Because of your retail sales at the trade show, your company will be deemed a retail merchant doing business in Indiana and will be required to collect tax not only on the sales made at the trade show but other sales made from your Illinois location and shipped to Indiana customers. Retail licenses are valid for two years. If you attend the trade show only once, you may be able to petition for a temporary permit and collect tax only on the sales made at the trade show however, it is not clear if this option is available in Indiana. We could assist you in evaluating this option through our consulting services. See Indiana Informational Bulletin #37 and IN Statute IC 6-2.5-3-1. If you need assistance evaluating the components once you receive the details, we can assist you through our consulting services.

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