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We are being charged sales tax by our vendor on drop-shipments to customers that are exempt if we ship. Can this be right?

Full Question: We are starting to get charged sales tax by our vendor on drop-shipments they make for us on our customers that are exempt if we ship. Can this be right?

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Answer:

Diane Yetter photoIn a drop shipment transaction, the shipper of the goods is required to collect sales tax if they ship into a state where they are registered if they do not have a valid resale certificate from their customer (you) for that state. There are many states that would accept your SC resale certificate for shipments into alternative states. However there are some that will not and will require you to be registered in that state in order to issue a valid resale certificate. You would then be required to collect sales tax for that state from your customer on your selling price. I am assuming you are registered to collect SC sales tax and have a SC registration number. This will definitely suffice for shipments to SC. You need to provide a SC resale certificate with your SC number on it to your supplier. For the other states you listed, here is what you will need to provide to the seller: NC: Streamlined Sales Tax Certificate with your SC number VA: Virginia resale certificate with your SC number on it PA: Pennsylvania resale certificate with a statement that you do not have a presence in PA and have not established nexus in PA FL: if the goods are shipped from within FL, you must be registered to provide a FL resale certificate. If the goods are shipped from outside of FL, then your SC resale certificate should suffice GA: SC resale certificate as long as you don't have nexus in GA Click here to access the Streamlined Sales Tax Certificate

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