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I have a NJ resale certificate. I asked to have a taxable item drop shipped to a state where I do not have nexus but drop-shipper does. How can this be managed?

Full Question: I am in NJ and have a resale certificate. I ordered from a company, and asked to have a taxable item drop shipped to a state that we do not have Nexus status, but the company I ordered from does. If they shipped to us in NJ, we have resale, and would not pay tax, but since we shipped to a state (ME) that they have Nexus status, they charged us tax. I can not charge my customer in ME tax when I invoice them, since we are not Nexus. How can this be managed, as we should not pay tax.

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Answer:

Diane Yetter photoThis is referred to as a drop shipment transaction. The state of Maine will honor alternative documentation if you are buying for resale and directing your supplier to drop ship the goods to your customer in Maine. You should complete a Multistate Tax Commission resale/exemption certificate (www.mtc.gov) and insert your New Jersey number on the form and also in the description indicate you do not have nexus in Maine and are not required to be registered there and that this is a drop shipment. Diane Yetter

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