US Sales Tax – Are you selling products into the US?

Sales tax in the United States is a consumption tax imposed by state and local governments on the sale of goods and services. The tax is typically collected by the seller at the time of purchase and passed on to the government.

Each state has its own sales tax rate, which can vary widely from state to state and even within different local jurisdictions.

It’s important to note that not all states impose sales tax, and those that do may
exempt certain items or have different rates for specific categories of products.

Additionally, online sales tax regulations have evolved, and now many states require online retailers to collect sales tax on purchases made by residents of that state.

Sales tax is essentially collected on the basis of the rate that applies to each zip code. There are in excess of 44,000 zip codes in the USA, tax liability is determined:

  • At the state level
  • At the city level
  • At other defined geographical levels

There are literally hundreds of different tax rates that may be applied.

Every state is autonomous with respect to Sales tax and have different sales tax regimes. e.g California has 323 separate geographical sales tax regions.

The requirement to collect sales tax, file sales tax returns and remit sales tax is essentially determined by three tests:

  • Presence test – do you have a physical presence in the USA?
  • Financial nexus – do you exceed the nexus threshold for each / any state?
  • Other

Does this apply to you?
Please make contact if you need further information.