Sales Tax Drop Shipping

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Tourist
55 0 2

Hi Everyone!

I run my eCommerce business out of California. I currently only charge sales tax for customers in California. Do I have to charge sales tax for out of state customers? If so do I tax them based on their state sales tax rate?

I was told by an accountant that I don't have to worry about out of state sales tax, just California sales tax, but by county and district. 

I am using a drop ship business model and have many out of state suppliers that drop ship for me.

Please advise. Thanks so much :) 

Founder
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New Member
1 0 0

In general, you charge sales tax for a state only if you have physical presence in that state, or are legally set up there, or your state has some sort of agreement to cross tax. If none of the conditions apply, you normally don't have to charge any sales tax on orders from that state.

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Shopify Staff
Shopify Staff
113 0 6

Hello Ryan! 

Kassey here from the Shopify Guru Team! Taxes definitely differ greatly from country and location, but usually you would charge taxes for the state that you are selling from. If you are dropshipping, I would reach out to your accountant to double check if you need to charge taxes for the location that your vendor is from! I did find some helpful guides that I would recommend checking out: Should You be Charging Sales Tax on Your Online Store? and Sales Tax Guide for Shopify Sellers

I hope this helps, but if you have any further questions - be sure to reach out to Shopify support!

Kassey S
Shopify Guru
support@shopify.com

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