Charge sales tax for a service provided by independent contractor in another state?


1

So I have a sales tax question. Yes, I will be contacting an attorney, but I figured I should do some research before spending $$$.

Here is a situation. A company based in state A (office + incorporation + all employees + all sales people) provides a business service for a customer in a state B. Service in the state B is provided by a local (in state B) 1099 contractor. Should there be sales tax charged for that location?

Sales Tax Independent Contractor

asked Jul 17 '10 at 12:13
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Apollo Sinkevicius
3,323 points
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  • You may want to talk with a Tax CPA rather then an attorney. – John Bogrand 9 years ago

3 Answers


1

If I am not mistaken, you don't have to pay sales tax on services. Sales tax is generally reserved for physical objects that change hands (at least in California).

Even if you have to pay sales tax for services, you should not have to if the service is done out of state. Usually you don't pay sales tax in another state. For example, if you buy sometime from a catalog or from a T.V. ad, if the vendor is out of state, you don't pay state sales tax.

answered Jul 17 '10 at 22:58
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Jarie Bolander
11,421 points

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Depends upon whether the given state where the work is performed requires/charges sales tax on services.

Adam
Accountant Wilmington NC

answered Jul 18 '10 at 06:00
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User3776
172 points

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State sales tax laws differ on whether the tax is charged only on products vs services. Nexus issues may also be involved in whether you are required to pay/charge sales taxes. Conferring with a good tax CPA is best.

answered Oct 13 '10 at 04:04
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Starr Ed
948 points

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Sales Tax Independent Contractor