Drop Shipment Certificate: Fill & Download for Free

This is a common problem related to drop shipment transactions. MA is one of the states that requires you to be registered in order to issue a resale certificate. LA is one that has some special rules that need to be looked at individually.A retailer that needs to be able to issue a resale certificate in this situation is able to register with the states as a voluntary collector. Just remember that this means you need to collect tax on all taxable sales into any state where you are registered - not just the ones through the drop shipper that is sending goods into the state on your behalf.If you want to learn more about sales tax issues for drop shipments - check out our on-demand webinar - Basic Concepts of Drop Shipments Webinar On-DemandI have also written a book about this that can be purchased from CCH. For more information visit Drop Shipments: Taxation, Compliance and Planning (2012)I hope you find this helpful!diane

Nevada is part of the Streamlined Sales Tax Initiative (SST) and therefore it is acceptable for a drop shipper (your supplier) to accept an out of state resale certificate. See Page on State page two under drop shipments.Also the SST agreement states that using a drop shipper does not create nexus for the out of state retailer. See Page on Streamlinedsalestax

A2A. Assuming this refers to sales tax; there's noting unusual about a drop shipping business from an income tax standpoint.For sales tax, it depends on where the drop shipper is based, and where the buyer and seller are located.A drop shipment is generally treated for tax purposes as two separate and simultaneous transactions - a “sale for resale” from the drop shipper to the seller, and a retail transaction between the seller and buyer.There are three possibilities, two of which are fairly easy to address:Neither the seller nor the drop shipper have nexus for sales tax purposes in the destination location. Neither party charges sales tax, and the buyer must pay use tax.The seller has nexus for sales tax purposes in the destination location. In this case the seller charges the buyer sales tax on the entire transaction and the drop shipper has no obligation to charge sales tax regardless of whether the drop shipper has nexus or not.The drop shipper has nexus for sales tax purposes in the destination location, but the seller does not. In this case, the seller generally must provide the drop shipper with a resale certificate that is recognized in the destination location, otherwise the drop shipper is generally required to charge the seller sales tax on the “sale for resale” transaction.Note that, in some states (such as California), use of an in-state drop shipper by an out-of-state seller is treated as creating nexus for both parties - and the drop shipper may be required to collect sales tax on the entire transaction.If the seller provides a valid resale certificate, then the drop shipper doesn't have to worry about collecting sales tax.Generally, a drop shipper only has nexus when shipping to in-state customers, but nexus law is getting more complicated (especially in large states like California and New York). Talk to a professional.