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We sell equipment and software that is dropped shipped by third party and we install and repair equipment. Nexus?

Full Question: We are an NY company that sells equipment and software in NJ/CT/MA that is dropped shipped by a third party to companies in these states. In addition, we will send employees to install and repair equipment. We have no physical presence in these states and it is my understanding that we should not be charging, collecting and remitting sales tax for these three states. Is that correct?

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Answer:

Diane Yetter photoUnfortunately your understanding is incorrect. The fact that you are sending your employees into the states to install and repair the equipment is considered physical presence in the state and could create nexus if it is more than de minimus. In addition, if your suppliers are drop shipping the equipment and software into these states, if they have nexus in MA and CT they may be charging you sales tax if you can't provide resale certificates that are deemed acceptable by the state. MA requires a MA registration number in order for the resale certificate to be valid. In CT, the manufacturer is required to collect tax if they don't receive a CT resale number unless they are delivering the goods from out of state via common carrier. NJ will accept your NY registration number on a NJ or multistate resale certificate. If you have been doing business in these states for a period of time, it may be advisable to consult with an advisor to evaluate your options related to prior period liability. We would be happy to talk to you about your situation. If you need further assistance with this matter, please feel free to contact us directly.

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