M3 Sales Tax Decision on Customer Invoices
This section gives examples of tax decisions on intrastate and interstate sales. The examples explain the impact the tax rule, tax point, use of drop boxes, and the presence of Nexus in a state has on the tax decision. In the examples, the seller's location is the same as the delivering warehouse.
Intrastate sale in a destination-based state
This example is based on sales within a state with destination-based sales tax.
This table shows the locations used in the example:
| Type of location | State | City |
|---|---|---|
| Seller (delivering warehouse) | CO | Denver |
| Drop box (ship-via address) | CO | Aurora |
| Customer (delivery address) | CO | Colorado Springs |
This table shows the result of the tax decision, what tax type and rate that will be used in the tax calculation, based on the tax rule, locations, and tax point:
| Tax point | Tax type | Tax rate |
|---|---|---|
| 1-'Gds lve invent' | Sales tax | Denver rate |
| 2-'Gds transp addr' | Sales tax | Aurora rate |
| 3-'Gds final addr' | Sales tax | Colorado Springs rate |
Intrastate sale in an origin-based state
This example is based on sales within a state with origin-based sales tax.
This table shows the locations used in the example:
| Type of location | State | City |
|---|---|---|
| Seller (delivering warehouse) | TX | Dallas |
| Drop box (ship-via address) | TX | Austin |
| Customer (delivery address) | TX | San Antonio |
This table shows the result of the tax decision, what tax type and rate that will be used in the tax calculation, based on the tax rule, locations, and tax point:
| Tax point | Tax type | Tax rate |
|---|---|---|
| 1-'Gds lve invent' | Sales tax | Dallas rate |
| 2-'Gds transp addr' | Sales tax | Dallas rate |
| 3-'Gds final addr' | Sales tax | Dallas rate |
Interstate sale in a destination-based state [LPB1]
This example is based on sales between two states. The selling company is placed in a state with destination-based sales tax.
This table shows the locations used in the example:
| Type of location | State | City |
|---|---|---|
| Seller (delivering warehouse) | CO | Denver |
| Drop box (ship-via address) | NM | Santa Fe |
| Customer (delivery address) | NM | Albuquerque |
This table shows the result of the tax decision, what tax type and rate that will be used in the tax calculation, based on the tax rule, locations, and tax point:
| Tax point | Tax type | Tax rate |
|---|---|---|
| 1-'Gds lve invent' | Sales tax | Denver rate |
| 2-'Gds transp addr' | Seller use tax | Santa Fe rate |
| 3-'Gds final addr' | Seller use tax | Albuquerque |
Interstate sale in a destination-based state with Nexus
This example is based on sales between two states. The selling company is placed in a state with destination-based sales tax and has Nexus in the customer's state.
This table shows the locations used in the example:
| Type of location | State | City |
|---|---|---|
| Seller (delivering warehouse) | CO | Denver |
| Drop box (ship-via address) | NM (Nexus) | Santa Fe |
| Customer (delivery address) | NM (Nexus) | Albuquerque |
This table shows the result of the tax decision, what tax type and rate that will be used in the tax calculation, based on the tax rule, locations, and tax point:
| Tax point | Tax type | Tax rate |
|---|---|---|
| 1-'Gds lve invent' | Sales tax | Denver rate |
| 2-'Gds transp addr' | Sales tax | Santa Fe rate |
| 3-'Gds final addr' | Sales tax | Albuquerque |
Interstate sale in an origin-based state
This example is based on sales between two states. The selling company is placed in a state with origin-based sales tax.
This table shows the locations used in the example:
| Type of location | State | City |
|---|---|---|
| Seller (delivering warehouse) | TX | Dallas |
| Drop box (ship-via address) | NM | Santa Fe |
| Customer (delivery address) | NM | Albuquerque |
This table shows the result of the tax decision, what tax type and rate that will be used in the tax calculation, based on the tax rule, locations, and tax point:
| Tax point | Tax type | Tax rate |
|---|---|---|
| 1-'Gds lve invent' | Sales tax | Dallas rate |
| 2-'Gds transp addr' | Seller use tax | Santa Fe rate |
| 3-'Gds final addr' | Seller use tax | Albuquerque |
Interstate sale in an origin-based state with Nexus
This example is based on sales between two states. The selling company is placed in a state with origin-based sales tax and has Nexus in the customer's state.
This table shows the locations used in the example:
| Type of location | State | City |
|---|---|---|
| Seller (delivering warehouse) | TX | Dallas |
| Drop box (ship-via address) | NM (Nexus) | Santa Fe |
| Customer (delivery address) | NM (Nexus) | Albuquerque |
This table shows the result of the tax decision, what tax type and rate that will be used in the tax calculation, based on the tax rule, locations, and tax point:
| Tax point | Tax type | Tax rate |
|---|---|---|
| 1-'Gds lve invent' | Sales tax | Dallas rate |
| 2-'Gds transp addr' | Sales tax | Santa Fe rate |
| 3-'Gds final addr' | Sales tax | Albuquerque rate |