Thursday, October 08, 2009

Nutty Drop Ship States

Part of a continuing series on drop ships

[listed revised on 5/26 - not completely overhauled]

This is one of those things that has been rattling around on my articles-to-write list for a while. And I needed to update the list I use in my seminars and webinars

Herewith is, as of today, a listing of the "nutty drop ship" states. These are states that are either explicitly "nutty" or I failed to have the necessary language (in RIA's sales tax database) that makes them "not nutty." In other words, my default is that a state is "nutty" unless I can find enough information to make them "not nutty." This article explains "nutty."

Note that some of the states listed offer wiggle-room. Some will accept special paperwork or certificates. Several differentiate between interstate and intrastate shipments. FOB points may come into play. However, the states marked with an asterisk* appear to offer very little wiggle-room, if any.

You always need to do some research to determine the drop ship rules in the delivery state.  Also, remember what I've said about information in tabular format. Check everything out yourself before making any serious decisions. See the disclaimer.

NOTE: This list is for illustrative purposes.  It's out of date.  Do your own research.

North Dakota
Pennsylvania (new rule in Feb 2010)
South Dakota

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

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Anonymous said...

Based on your list, is it safe to say that if a vendor of ours is drop shipping to a client of ours in a state not on your list, then they should not be charging us tax? We do not have nexus in any state. said...

In your scenario, does anything change if Moe is also a reseller to the final end user? Will I (Curly) have to produce a resale certificate of my own to Larry, or can I ask Moe to give me his resale certificate and forward that on to Larry to exempt myself since I do not have a resale certificate of my own?

Also related, have you heard of Pass Through Exemptions and a Home Rule Certificate?

Jim Frazier said...

First of all - note the disclaimer above and below the list - never trust lists. That list is there as a snapshot of the way things were when I wrote the article. You need to research how things are done in the delivery state. YOU MUST DO SOME RESEARCH.

And to answer the second question, it might. Moe may have an exemption and many states will accept it. Not all, but many.

But again, LOOK AT THE DELIVERY POINT state and see what they specifically say.