Sales tax when you resell across state lines

Liquidation stock moves across the country. You might be registered in Georgia, buy a pallet from a seller in Texas, have it shipped to a warehouse in Tennessee, and sell the contents online to customers in all 50 states. Each of those steps has a sales tax question. The good news is that they separate cleanly into two halves: when you buy and when you sell.

Part 1: When you buy a lot

The delivery state is the one that counts

For goods that are shipped, a sale is generally taxed (or exempted) in the state where the goods are delivered to the buyer. So when you buy a lot:

• Shipped to you: the state that matters is the ship-to state. A lot shipped from Texas to Tennessee is a Tennessee question.
• Collected by you: if you pick the lot up from the seller's warehouse, delivery happens there, so it's the seller's state. A Georgia buyer collecting from a Texas warehouse needs to be covered in Texas.

That's exactly how ZipToSale picks which certificate to share: the ship-to state, or the seller's state for pickup.

Using your certificate in another state

You don't have to be registered in every state you buy into, but you do need a certificate the delivery state accepts. Broadly:

• Multistate certificates. Many states accept the Streamlined Sales and Use Tax (SST) certificate or the MTC Uniform Sales & Use Tax Certificate, completed with your home-state registration number. Arkansas and Washington, for example, accept an SST form from a buyer registered in another state.
• The state's own form. Some states want their own form. Some of those expect a registration number from that state, which can mean registering there if you buy into it regularly.
• State-issued certificates. In states like Florida and Alabama the certificate is a state-issued document. Florida, Louisiana and Alabama
• No sales tax. Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax (Alaska has local taxes in places).

Which states accept which certificate · The four kinds of state

What if the seller doesn't charge tax in your state anyway?

A seller only has to collect sales tax in states where they're required to, generally where they have a physical presence or enough sales to cross that state's threshold (more on thresholds below). An out-of-state seller with no obligation in your state may not charge tax at all, with or without a certificate. Many still ask for one, because their obligations change as they grow and the certificate keeps their records clean.

Use tax: the other side of tax-free buying

If you buy something tax-free and then use it rather than resell it, you generally owe use tax to your state, at the same rate as sales tax. The same applies when you buy from an out-of-state seller who didn't charge tax and you keep the item. For resellers, it typically comes up with items pulled from a lot for the business: a vacuum from a home-goods pallet that ends up cleaning your warehouse, or a monitor that ends up on your desk. Most states have a line for it on the sales tax return.

Part 2: When you sell to your customers

Where you have to collect

Once you resell, you're the seller, and the question flips: where must you collect sales tax?

• Your home state, and anywhere else you have a physical presence: a store, a warehouse, inventory in a fulfillment center, sometimes employees.
• States where you cross the economic nexus threshold. Since the Supreme Court's 2018 Wayfair decision, states can require out-of-state sellers to collect once their sales into the state pass a threshold, commonly $100,000 a year in sales, and in some states a number of transactions. Thresholds and what counts toward them vary by state.

Marketplaces collect for you, mostly

If you sell through a large online marketplace or resale app, it is usually a marketplace facilitator: the law makes the marketplace collect and remit sales tax on your sales there, in nearly every state with a sales tax. Many states don't count those sales toward your own threshold either, but some do. Sales through your own website, in person, or to other businesses are yours to handle.

Selling wholesale to other resellers

If you break down a pallet and sell smaller lots to other resellers, you're now the one receiving resale certificates. Collect a valid certificate for the delivery state from each business buyer, check it's complete and current, and keep it. It's your evidence if your state asks why you didn't charge tax. On ZipToSale, sellers get the buyer's certificate on the order automatically. Selling on ZipToSale

Keep records like you'll be audited

States can audit several years back. Keep:

• every resale certificate you give (which seller, which state, which date range) and every certificate you receive;
• every invoice, showing tax charged or not charged;
• your use-tax calculations for items you took out of inventory.

ZipToSale keeps the certificate shared on each order and the order's full history on the order page, for buyer and seller alike.

A worked path

Illustrative. A reseller registered in Georgia:

1. Buys a lot shipped to their Georgia warehouse from a Texas seller: a Georgia certificate.
2. Collects a lot in person from a seller in Alabama: Alabama is the delivery state, and Alabama requires its own state-issued license, so the Georgia registration doesn't help here. They'd either register in Alabama or buy that lot taxable.
3. Buys a lot shipped to a fulfillment center in Tennessee: Tennessee accepts the Streamlined certificate, which may work with their Georgia number. Holding inventory in Tennessee may also create a duty to collect Tennessee tax on their own sales.
4. Sells on a resale app: the app collects tax in most states. Sales on their own website count toward each state's threshold.

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