Shipping Products

Question: We work with a lot of interior designers who order products online and ship products directly to their clients in a state other than the entity's home state. They are often below economic nexus thresholds, but I'm wondering if simply shipping product to a client's home from online orders creates nexus (there is no warehouse)?

Answer: As long as they are below economic nexus thresholds, simply shipping to a different state doesn't trigger nexus, except in Kansas where one sale is enough to trigger nexus.As Sam mentioned in his response, there is no "cheat sheet" on states that tax services. It sounds like a great idea but would likely be outdated fairly quickly. A workaround that you might use is to perform a periodic review of services performed by state, and then review the taxability of services for the states reflecting the most material revenues. Once a state taxes services in any capacity, the taxability will likely not change so it makes more sense to focus on the largest states in which services are performed where services were not typically taxable.

Read more: Who you are, where you are and how you--and your clients--can comply

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