A sales tax is a government-imposed consumption tax levied on the sale of goods and services. A standard sales tax is assessed at the moment of sale, collected by the shop, and paid to the government.
Depending on the regulations in that area, a business may be liable for sales taxes if it has a presence there, which can be a physical site, an employee, or an associate.
- Manufacturers' sales tax is a tax levied on manufacturers and producers who sell tangible personal property.
- A wholesale sales tax is imposed on the wholesale sales of tangible personal property that has been packaged, labeled, and prepared for shipment or delivery to end users and consumers.
- Retail sales tax is a tax on retail sales of tangible personal property to end users and industrial users.
- Gross receipts taxes are levied on all business sales. They have been chastised for their "cascading" or "pyramiding" effect, in which an item is taxed many times as it moves from manufacturing to final retail sale.
- Excise taxes are levied on a limited number of products, such as gasoline or alcohol, and are normally levied on the producer or wholesaler rather than the retail seller.
Use tax is a tax imposed directly on the consumer for products acquired without sales tax, typically from a seller outside the jurisdiction of the taxing authority (such as a vendor in another state). Usage taxes are frequently imposed by states that have a sales tax, but they are typically enforced exclusively on major commodities such as automobiles and boats.
A securities turnover excise tax is a tax levied on the trading of securities.
- Value added tax (VAT) is a tax levied on all sales and eliminates the need for a resale certificate system. This tax is applied to the difference in the "value added" between the original purchase price and the subsequent purchase price of an item, which helps to prevent tax cascading.
- FairTax is a proposed federal sales tax that would replace the federal income tax in the United States.
- Turnover tax, comparable to a sales tax, but applied as an indirect tax to intermediate and possibly capital items.
A physical presence is often defined as a nexus, however this "presence" is not confined to having an office or a warehouse. The way a government defines a nexus determines whether a business owes sales taxes to that government.
A nexus can be formed by having an employee in a state, as well as having an affiliate, such as a partner website that sends traffic to your company' page in exchange for a cut of the revenues. This case exemplifies the difficulties that exist between ecommerce and sales taxes. As an example, New York has implemented "Amazon laws," which mandate that internet businesses, including Amazon.com Inc. (AMZN), pay sales taxes even if they do not have a physical presence in the state.
There are four states in the United States that do not have sales taxes: Delaware, New Hampshire, Montana, and Oregon. Alaska also does not have a statewide sales tax, but enables local governments to levy one.
- A sales tax is a type of consumption tax levied on the purchase of goods and services.
- A sales tax is often charged as a percentage of the retail cost at the point of purchase.
- Municipal and municipal governments may levy a sales tax in addition to the state sales tax.
- Four states in the United States have no sales taxes, and Alaska is the fifth.
- Many countries outside the United States levy a value-added tax rather than a sales tax.