A Clear Guide to Sales Tax Compliance
Understand your obligations for physical and economic nexus.
First, Why Does Sales Tax Exist?
Sales tax is a fee collected by businesses on behalf of the state. This revenue is essential for funding public services that communities rely on every day.
Public Schools
Infrastructure
First Responders
The Two Types of “Connection” (Nexus)
📍 Physical Nexus
The traditional trigger, based on having a tangible presence in a state.
- ✓An office or warehouse.
- ✓Employees working in the state.
- ✓Storing inventory in the state.
💲 Economic Nexus
The modern trigger, based on your sales volume into a state, even with no physical presence.
Common Thresholds:
$100,000 in sales OR 200+ transactions in a year.
What Does “Selling Enough” Mean?
Once your sales into a state cross its specific threshold, you have “economic nexus.” This chart visualizes a business’s progress toward the common $100k threshold. Crossing the line triggers tax collection duties.
How Common Is This Rule?
Economic nexus is the new standard for online businesses. Almost every state with a sales tax has adopted these laws.
Once You Have Nexus, What Are Your Obligations?
Register
Get a sales tax permit from the state’s department of revenue.
Collect
Calculate and collect the correct sales tax on all taxable sales.
File & Remit
File regular returns and send the collected tax to the state.
Manage
Keep valid resale certificates from tax-exempt customers.
A Key Tool: The Resale Certificate
A resale certificate allows a distributor to buy inventory from a vendor (us) without paying sales tax. This is because the distributor will collect the tax on the final sale to the end customer.
🛡️ For the Distributor (The Buyer)
The certificate is your tool to operate profitably and legally.
- Protects Profits: Avoids paying tax on items you plan to resell.
- Smooths Transactions: Provides vendors proof to sell tax-free.
🏢 For the Vendor (Us)
The certificate is our shield against tax liability during an audit.
- Eliminates Audit Risk: It’s our legal proof for not charging tax.
- Builds Trust: Ensures partnerships are built on compliance.
Download Forms & See Accepted States
Two main multi-jurisdiction forms are widely accepted. Download them here and check which states recognize each one.
States Accepting the MTC Certificate
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- D.C.
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Iowa
- Kansas
- Kentucky
- Maine
- Michigan
- Minnesota
- Missouri
- Nebraska
- Nevada
- New Jersey
- New Mexico
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Washington
- Wisconsin
*Special instructions vary by state and are listed on the PDF forms.
States Accepting the SST Certificate
- Arkansas
- Georgia
- Indiana
- Iowa
- Kansas
- Kentucky
- Michigan
- Minnesota
- Nebraska
- Nevada
- New Jersey
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Rhode Island
- South Dakota
- Tennessee
- Utah
- Vermont
- Washington
- West Virginia
- Wisconsin
- Wyoming
How to Fill Out
Follow these steps to ensure your resale or exemption form is completed correctly.
1. Seller’s Information (That’s Us!)
In the “Seller” section, use our company information:
Name: IDProductsource LLC
Address: 728 SW Munjack Circle, Port Saint Lucie, FL 34986
2. Buyer’s Information (That’s You!)
Enter your official company information exactly as it appears on your business registration.
3. Reason for Exemption
If you have a resale certificate, provide the number and check the “Resale” box.
Drop Shipping – Quick State Reference
California, Massachusetts, Mississippi → Pass-through certificate (from end customer) plus a no-nexus letter from the distributor.
District of Columbia, Hawaii, Maryland → Always taxable without a resale certificate from that state.
All other states → Letter stating no nexus and/or completed MTC form showing no nexus on the applicable state line.
Example (No Nexus Rule):
If you are in Illinois shipping to a customer in Michigan, and you have no nexus in Michigan, complete the form like this:
MI:1234567890 - IL - no nexus
(Where 1234567890 is your Illinois resale number.)
Key Tips to Avoid Rejection
Describe the Items
A general description such as “Promotional Products for Resale such as lanyards, patches, silicone band, etc.” is sufficient.
Description of Business
Make sure to clearly state the nature of your business (e.g., “Distributor of promotional products”).
Check Your Business Type
Don’t forget to check the box for how your business is engaged or is registered (e.g., Wholesaler, Manufacturer, Seller, etc.).
Don’t Forget to Sign!
Unsigned forms will be marked as invalid. Don’t forget to sign your name, include your title, and provide a date.
Special Case: Shipping to Freight Forwarders
When we ship to a freight forwarder, we must have proof of export to exempt the sale from sales tax.
The Process
Tax is Charged Initially
We must charge sales tax upfront, as we don’t have export proof at the time of sale.
You Provide Export Proof
After shipment, you must send us the required documents proving export.
We Refund the Tax
Once we verify the documents, we will issue a full refund for the sales tax.
Required Document #1: Bill of Lading
The official shipping document from the carrier (e.g., FedEx, DHL) showing the goods have left the USA.
Required Document #2: Affidavit of Export
A signed statement confirming the items were for export. We can provide a template.
