How to determine Nexus in Dropshipping:
In a drop shipping setting, just keep in mind that there are 3 players:
1. Seller
2. Dropshipper (distributor)
3. Customer
The general rule: Sales tax is collected at the end-state of the sale, where the customer resides.
Note: If the Dropshipper has Nexus, but the Seller does not, then, the seller does not charge sales tax to its customers. *The Dropshipper would charge the seller sales tax, unless, the seller has a resale certificate.
How to determine Nexus in Dropshipping
| Dropshipper has Nexus | Dropshipper does NOT have Nexus | |
|---|---|---|
| Seller has Nexus | Dropshipper charges Seller tax, unless there is a resale certificate.Seller charges its customer tax | Dropshipper does NOT charge Seller taxSeller charges its customer tax |
| Seller does NOT have Nexus | Dropshipper charges Seller tax unless Seller has a resale certificate.Seller charges customer tax | Dropshipper does not charge you taxSeller does not charge its customer’s tax |
How to determine Nexus in Dropshipping