When I order from AliExpress and ship products to certain states (New York, South Carolina) I am getting hit with a sales tax that is taking a huge cut of my profit. I sell high ticket items and I should be profiting around $130 ....but with the sales tax is brings down profits to $75. A huge loss in my eyes.
How do you guys combat the sales tax from AliExpress when shipping to these places? Do you just set up sales tax for those states in your store?
I'd like to know because I imagine this won't be my first or last time having to deal with this when drop shipping from AliExpress. Thanks.
I had a chat with Aliexpress. Here are the states customers are being charged tax if shipment is delivered to those states. Anyone know how and where to apply for exemption, please advise. I read about Nexus that you have to reach out to individual states for this.
District of Columbia
I"m a state and local tax professional specializing in multi-state sales and use taxes. The states you mentioned will have different rules about what is acceptable documentation in a drop shipment situation. For example District of Columbia requires the out-of-state seller to register for a DC sales tax permit in order to issue a resale cert to the drop shipper (AliExpress) in order for AliExpress to not charge you the sales tax. Of course then you will have the responsibility of collecting and remitting DC sales tax on all sales shipped into DC.
On the other hand some of the states will allow the out-of-state reseller to issue an exemption certificate (form specified by each state) with their home state registration number (i.e. sales tax permit number) to the drop-shipper as valid support for drop shipper to not charge sales tax. (thereby allowing you the "out-of-state reseller" to avoid additional administrative cost of registering, collecting and remitting that states sales tax.
Hope you find this helpful. If you think their is a value to knowing each states specific requirements along with obtaining the required forms and would like further information please email email@example.com