Wholesale company multi state sales

[sdtaxman]

I have a potential new client (s corporation) and am struggleing with the state income tax filings. They are a wholsale supplier to various customers throughout all 48 states, do they need to file a state income tax return for each state they have sales to or is it all considered income to the state that they ship the product from and have their warehouse?
Any thoughts would be greatly appreciated as I am not sure which way to turn.

Thank you.

[taxea]

Present law, as I understand it, is that most states do not collect income tax unless the company has a physical location within the state or the income is actually collected in that state.

The other issue is states that collect sales tax. Many are trying to change the law on collecting sales tax from your clients customers because of the volume of sales to their states from the likes of various on-line businesses that is being lost by residents who buy out of state.

I suggest that you research the income and/or sales/excise tax law of each state in which your client does business. There are some that do require their sales tax be collected and paid to the state by the business. I don't know about other states but Hawaii does have a general excise tax on wholesale goods.

[erchess]

My Opinion

I think you're right to stop and think about this because every state is looking for new revenue streams. I'm deleting the rest of my post because taxea has given a better answer.

[Snaggletooth]

Fob

If goods are dispatched from the state of origin and title passes at the point of a carrier the sales are considered "origin" sales and are attributable to the state of the shipping point. Client should not have any problem with other states. In fact, a customer can come to your client's premises and pick up merchandise, and these are still "origin" sales.

There may be a problem if your client delivers products to other states. In this case, title passes to the customer out-of-state, and they become "destination" sales. If there is a minimal amount of this going on, I would ignore it. But if it is going on with some customers on a regular basis, your client may be deemed as having "nexus" in the state of destination.

[JON]

It is a mess

but some states have won nexus if you were an exhibitor at a convention in their state. I think the previous infromation is appropriate, but as soon as the states win against Amazon and others on the net all of this is going to change. The U.S. Senate has the issue coming up.

[taxea]

but some states have won nexus if you were an exhibitor at a convention in their state. I think the previous infromation is appropriate, but as soon as the states win against Amazon and others on the net all of this is going to change. The U.S. Senate has the issue coming up.

As an exhibitor at a state convention the business has a presence in the state, though temporary so I would think that income would be subject to that state's tax.

Heaven help Hawaii residents if Amazon loses and has to collect sales (GE) tax from us. They are our only good outside source for merchandise. I, for one, won't be happy to see that day.

Amazon pulled all of it's Hawaii vendors as soon as they heard Hawaii may be passing a law requiring state tax to be paid. That was a year ago and so far the state has not been successful in its efforts against Amazon.

I will also say that if it does happen I will be boycotting WalMart and all other stores that are the cause of this issue.

[JON]

We all forget

in the late 80s a commission at the request of some states was set up on the federal level to come up with some rules for all the states concerning sales tax. As I remember the federal would not act until at least 36(?) states joined. At first a lot of states including NY and CA wanted nothing to do with it. Then came the "dot com" and everything got very confusing. About two years in reading I came accross an article about the confusion in sales taxes between states and they said that there were like 40+ states who had joined the compact now, but the feds did not know what to do now because of the "dot.com"-CA and NY had joined... I think, lobbyist not included, the Senate review of Amazon will be interesting and will be the start of some major changes to sales taxes if they get Amazon taxable...

I think what could be the result is the State you are in will tax all taxable sales, you report to them the states you sold to and they will do the rest. More people employed-in government. Dot.coms are spending a lot to keep their competitive advantage, and one thing for sure votes are for sale in DC.