Tax exemption online?

October 24, 2008 8:18 AM

How do I file an out of state sale that I made online. I know that I do not charge tax to out of state customers but is there a exemption form that I need to fill out or somewhere I can get more information on this process. I run a company in Connecticut and we have been making more and more out of state sales and I need to figure out how to go about the exemption process. Thank you for your help.
posted by CFMartin to work & money (3 comments total)

I work for a five state company HQ'ed somewhere not in Connecticut. The only time we are required to collect and report sales tax from out of state customers is when they pick up product on their truck from our dock(s) and they do not have a valid Sales And Use Tax Exemption for the FOB state. All other OOS sales are not taxed.

I would say you don't have to report sales for goods shipped out of state by 3rd party carriers but {disclaimer} IANA accountant, the co I work for doesn't do online sales, we're not in CT & we do (90%) resale business so your company may have to follow different rules.

The state of Connecticut should have a manual (my state's manual is available from Lexis Nexis so they probably do other states too) that tells you exactly when to collect sales tax and how to report it.
posted by jaimystery at 11:13 AM on October 24, 2008

My advice would be to look at it from the other angle. Only Connecticut *requires* you to charge sales tax, right? You are only in business in that state, and so are only bound by their laws. Purchasers in other states are the ones on the hook to pay their own sales tax. YMMV...
posted by gjc at 8:26 PM on October 24, 2008

I can't comment on laws and taxes specific to Connecticut, but I can tell you what happens when we make retail and wholesale sales to out-of-state customers.

We are in DC, but when we ship a retail product to another state, we account for the sale without sales tax in our books. It's recorded as a non-taxable sale. This is for retail.

For wholesale, our Department of Consumer and Regulatory Affairs (DCRA) provided us with a form to send with wholesale products to the retail stores that buy our wholesale products. This form states essentially that it was a wholesale product shipped to them and they can sell it at retail in their state. We don't owe any tax on any wholesale sales made.

You'll want to determine if you've made a retail or wholesale sale and then check with your state's equivalent to our DCRA about what is required.
posted by battlecj at 11:34 AM on October 30, 2008