Our e-commerce business is based in Missouri and we sometimes sell car and truck tires through a drop shipment program. The supplier ships directly to the end customer. Do we charge sales tax on the sale or the original supplier?

 

1) If neither the retailer nor the original supplier have tax nexus, no sales tax is due and the client is responsible for remitted use tax to the state in which they're located.

2) If the retailer has sales tax nexus, but the original supplier does not, then the retailer would have to collect sales tax. This appears to only be the case when selling to a client located in Oregon. However, the retailer should review their tax nexus with all other states.

3) The retailer does not have sales tax nexus, but the original supplier does. The supplier would collect sales tax from the retailer and they could provide a resale exemption and charge the client the sales tax instead. The rules with this option vary by state. Separately, you may find this sales tax guide helpful from our partner Avalara.