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How Origin vs. Destination
sales taxes work in the US
Origin-based
US sales tax
Origin-based sales taxes mean you use the tax
rate from the origin of the provider.
CustomerMy Business
Provider
The tax rate you apply to the sale must be the
local rate where your business is located. Taking
into account state, county, city, and district.
My Business Texas
Dallas
Dallas City
District 10
Destination-based
US sales tax
Destination-based sales taxes mean you use the tax
rate of the destination of the product or service.
CustomerMy Business
Destination
Customer
The tax rate you apply to the sale must be
the local rate where the buyer is located.
Or where the product is headed.
For physical products
Charge the tax rate of the ship-to
location of the physical product.
Customer
For digital products
Charge the tax rate of the
customer’s billing address.
Which one
applies to you?
Depends on where your business is located. Different rules
apply to in-state businesses versus out-of-state businesses.
Focus on the state where your business is based. Does your
home state have an origin-based tax or a destination-based tax?
You charge all customers,
who are also in your
state, the tax rate of your
business’ location.
Your state is
origin-based
AZ
UT
NM
TX
IL
OH
VA
PA
MO
TN
MI
CA
My Business
Customer
You charge all customers,
who are also in your state,
the local rate of the buyer.
Your state is
destination-based
FL
GA
SC
NC
WV
VT
NY
NJ
MA
MD
CT
RI
ME
AL
LA
AR
KY
KS
OK
IN
IA
CO
NE
SD
ND
MN
WI
MIWY
WA
ID
NV
HI
What to do when you
have sales tax nexus
in another state?
My Business
Once you have sales tax nexus in another
state, you’re a remote seller.
NEXUS
Remote
seller
NEXUS
Most states want remote sellers to charge tax at the
destination rate. Meaning when you sell to other states, you
charge the tax rate of the ship-to location of the physical
product or the billing address for a digital product.
However, there are three exceptions! These three
origin-based states want remote sellers to follow
the origin-based tax policy:
California
Arizona
New Mexico
AZ
NM
CA
Need a helping hand?
We can handle sales tax for you!
Visit quaderno.io

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How origin vs. destination sales taxes work in the us

  • 1. How Origin vs. Destination sales taxes work in the US
  • 3. Origin-based sales taxes mean you use the tax rate from the origin of the provider. CustomerMy Business Provider
  • 4. The tax rate you apply to the sale must be the local rate where your business is located. Taking into account state, county, city, and district. My Business Texas Dallas Dallas City District 10
  • 6. Destination-based sales taxes mean you use the tax rate of the destination of the product or service. CustomerMy Business Destination
  • 7. Customer The tax rate you apply to the sale must be the local rate where the buyer is located.
  • 8. Or where the product is headed.
  • 9. For physical products Charge the tax rate of the ship-to location of the physical product.
  • 10. Customer For digital products Charge the tax rate of the customer’s billing address.
  • 12. Depends on where your business is located. Different rules apply to in-state businesses versus out-of-state businesses.
  • 13. Focus on the state where your business is based. Does your home state have an origin-based tax or a destination-based tax?
  • 14. You charge all customers, who are also in your state, the tax rate of your business’ location. Your state is origin-based AZ UT NM TX IL OH VA PA MO TN MI CA My Business
  • 15. Customer You charge all customers, who are also in your state, the local rate of the buyer. Your state is destination-based FL GA SC NC WV VT NY NJ MA MD CT RI ME AL LA AR KY KS OK IN IA CO NE SD ND MN WI MIWY WA ID NV HI
  • 16. What to do when you have sales tax nexus in another state?
  • 17. My Business Once you have sales tax nexus in another state, you’re a remote seller. NEXUS Remote seller
  • 18. NEXUS Most states want remote sellers to charge tax at the destination rate. Meaning when you sell to other states, you charge the tax rate of the ship-to location of the physical product or the billing address for a digital product.
  • 19. However, there are three exceptions! These three origin-based states want remote sellers to follow the origin-based tax policy: California Arizona New Mexico AZ NM CA
  • 20. Need a helping hand? We can handle sales tax for you! Visit quaderno.io