When to charge buyers with sales tax

Hey everyone!

This is one of the most common questions I get from members regarding sales taxes so below I’ve given you a couple of scenarios to help you know when to charge your buyers with sales tax.

1. You charge buyers with sales tax only if they’re in the same state as to where you’re selling from. For example, if your business is operating in Illinois (regardless of whether you’re dropping from an international supplier), then you will charge your buyers from Illinois with sales tax. If your buyer is located outside the state of Illinois, then you waive any sales tax charges.

2. You can charge customers with sales tax ONLY if you have a sales tax ID. Otherwise, it will be illegal if you charge buyers with this when you haven’t even acquired one just yet.

The sales tax you collect has to be filed come tax season as this will be used to help fund government facilities i.e. national parks, public libraries, etc.

For those of you who haven't acquired a sales tax ID yet, the link below will guide you on how to get one:

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Currently I am just an individual seller on eBay with a $5,000 per month selling limit. I'm looking to drop ship with some suppliers I have come across on Alibaba and on here. Now those suppliers are not asking for any sort of seller's ID. Would charging sales tax apply to me? What if someone was just selling on eBay for some quick buck; would they have to charge sales tax? I am not a licensed businessman nor do I have a business store on eBay. So I am just wondering if I would have to charge customers with sales tax whenever I make a sell.

Hi Krishna,

Welcome to the forum!

I would refer you to scenario 2 from my above example. If you don't have a sales tax ID, then you don't charge your buyers with sales tax. Selling on eBay for some quick buck would still need you to collect sales tax again, if you have a sales tax ID. If you don't, then no sales taxes are to be collected.

When your business gets serious, it's best to acquire a sales tax ID to avoid problems with tax audits.