Sales tax is defined as a tax on the sale, transfer, or exchange of a taxable item or service.
Retailers are often not required to collect sales tax on purchases made by consumers in states where the retailer does not have a physical presence or "nexus." However, whether a business is required to collect sales taxes from buyers in a particular state depends on the way that state defines nexus.
Nexus is generally defined as a physical presence, such as a sales office or warehouse, employee, salesperson, participation at a trade show, or other factors. Many states also consider any company with “economic nexus” to be required to collect sales tax from buyers in that state.
Use tax is defined as a tax on the storage, use, or consumption of a taxable item or service on which no sales tax has been paid. Use tax is a complementary or compensating tax to the sales tax and does not apply if the sales tax was charged. Use tax may also apply to purchases shipped to a consumer in another state, including online purchases.
Middesk is not able to provide legal advice to its customers on whether their specific business should be registered for sales and use tax in a particular state. Please consult your legal counsel, finance department, or accountant for guidance pertaining to your specific business.