I have a business in Iowa and I sell mostly here in the state of Iowa. I have a customer in Florida that would like to make a large purchase ~ $45,000. It says the nexus sales tax threshold is $100,000. Based on what I've read there that would mean I don't charge sales tax. The customer is saying they have to pay sales tax or a use tax at least. Is this accurate/ how do I incorporate this in the amount I'm charging them.
Posted by Gambling-Goat
6 Comments
your understanding seems correct, you don’t charge sales tax if you’re below the threshold. however, the customer might be responsible for use tax in florida. consult a tax professional for specific guidance.
Correct. If you don’t exceed $100k in sales you are not required to collect/remit sales tax. If the customer has to pay use tax then that is on them.. they file that as part of their annual state tax returns
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I think you’re correct. You may not have to charge a sales tax, but the customer might still be on the hook for a use tax. Florida Statutes ch. 212 treats sales tax and use tax as a dual-entry ledger, an either or. Sales tax applies when the seller is in Florida and obligated to collect. Use tax applies when the purchase escapes that net (for example, buying from you) but the item ends up in Florida.
This obligation is on him, not you, though. If your customer ordered gear from, say, Oregon (no sales tax) and the vendor (you) doesn’t have Florida nexus (and from we can tell you don’t) and doesn’t collect Florida tax, Florida says your customer owes the equivalent amount directly to the Department of Revenue. rn, rates vary by county surtax.
You shouldn’t incorporate it at all. Just tell them that they may have to pay a use tax in Florida. Certainly, you have no responsibility to be an unpaid revenue agent for the state of Florida.
I live in Florida. It is correct that if a Florida resident buys out of state, there is a use tax if the seller does not charge sales tax and hand it over to Florida. The buyer is going to pay one way or another. Florida sales tax auditors for the buyer will look for that first and the penalties are confiscatory.
I’m retired, so I’m not up to date on the nexus threshold. Keep a record of not meeting the threshold because you may receive a letter from the Florida DOR after “if” the buyer is audited.
As an aside, dealing with the FDOR makes you appreciate the IRS. I’m guessing it’s that way in every state.
They pay use tax themselves directly to the state. You do not have nexus in Florida, so you do not collect Florida sales tax.