Taxation of Cusomter Pick-Up Sales

By August 31, 2012 Uncategorized

Be alert to the state sales tax rules where out-of-state customers come into your home state to take delivery of products for delivery back to their home state. 

If the products being sold are for “resale”, make sure you get the appropriate resale certificate.  This might require that your customer first register with your state to obtain a valid number.  The failure to obtain a valid resale certificate will make these sales taxable in your state.  It’s tough to get tax collected after the sale has been completed.

If the property sold is taxable in your state, then your obligation is to charge sales tax.  It is irrelevant that the property purchased may be exempt in the state where it will be used.   This often happens with manufacturing machinery and equipment.  The out-of-state purchaser comes to your state to take delivery of machinery which will be exempt in their “home state”.  However, the state where the buyer takes possession of the equipment does not have an exemption for machinery or only allows the exemption for machinery which is used in that state.   

In most cases, the “export” sales tax exemption only appies to items place on common carriers for their delivery or are delivered outside the state by the seller’s vehicle.  There are some specific exemptions for aircraft and other common carrier vehicles.

Ned Lenhart, CPA
President