Sales and use tax
What a sale is, where it happens, and what documents prove the answer: taxability, exemptions, sourcing, certificates, and the audit and refund procedure that follows under state sales, use, and transaction privilege tax laws.
12Sales and use tax articles
Arizona
1 articleCalifornia
6 articles- When does a design studio owe California sales tax: concept or finished art?California taxes what a design studio delivers, not what it thinks, which makes the invoice the tax return in miniature: conceptual design work is a nontaxable service, finished art transferred in tangible form is a taxable sale, and finished art delivered only electronically is not taxed at all. The regulation even supplies a 75/25 split for the studio that bills concept and art in one line, a default rather than a penalty, though electronic delivery, not invoice structure alone, is what takes finished art out of the measure.Law as of Oct 9, 2026
- What must a seller do with over-collected California sales tax?A seller that charges customers more sales tax than California imposes has two legal options: give the excess back to the customers or hand it to the state. Keeping it is not on the list. The cleanup after a rate misconfiguration is therefore a sorting exercise, over-collections refunded or remitted, under-collections still owed by the seller, and customer short-payments sorted under the receivable, bad debt, and discount rules.Law as of Oct 9, 2026
- How do California manufacturers use the partial exemption and Cal Competes?California offers manufacturers two incentives that could not work more differently: a partial sales tax exemption that requires no application at all, just a certificate handed to the vendor at purchase, and the California Competes credit, a competitive program with application windows, evaluation factors, and a negotiated agreement. Companies routinely confuse the two, wait for approvals the exemption never required, and miss windows the credit strictly enforces.Law as of Oct 9, 2026
- What resale documentation survives a California sales tax audit?A wholesaler's California audit is decided by paper collected years earlier: the resale certificate, taken timely and in good faith, is what converts an untaxed sale into a defensible one. The recurring failures are all documentation failures, certificates confused with seller's permits, drop shipments papered from the wrong party, and one-time customers nobody certificated, and a certificate collected during the audit is not retroactive, so what outreach can still gather is evidence that the goods were in fact resold, which works only if it starts immediately.Law as of Oct 8, 2026
- Is SaaS taxable in California?For decades California taxed prewritten software only when it moved on tangible media, which left electronically delivered software and remote access, including SaaS, outside the tax entirely. Senate Bill 122 ends that era: operative January 1, 2027, sales and use tax reaches prewritten software on media, delivered electronically, or accessed remotely. The statute draws its own boundaries, custom software and human-effort services and raw computing capacity stay out, and it sources remote sales through a hierarchy of the purchaser's known addresses that begins with the billing address. The date splits every question in two. Behind it sits a refund lane for tax collected on electronic deliveries that were never taxable; ahead of it sits a compliance build that sellers and large purchasers have until January 1 to finish.Law as of Oct 10, 2026
- Does a stopover in California trigger use tax on goods in transit?Property that merely passes through California on its way to a final destination outside the state is generally excluded from California use tax under Revenue and Taxation Code section 6009.1, but a stopover that goes beyond transit handling, such as a substantive modification, can convert the stop into a taxable first use. The line runs between passive transit activity and functional use, and it is drawn case by case against the same documentation an audit will demand later.Law as of Oct 10, 2026
Multistate
3 articles- What is the true object test, and when does a service become a taxable sale?Sales taxes were built to reach sales of tangible personal property, and they reach services only where a legislature has named them. That design forces a classification on every transaction that pairs a deliverable with the expertise behind it: the engineering report delivered bound or as a file, the custom program shipped on media, the managed services contract that includes the equipment, the subscription that transfers nothing at all. The true object test, also called the dominant purpose or essence of the transaction test, resolves the question by asking what the buyer fundamentally sought, the property itself or the service of which the property is merely the vehicle. The answer is all or nothing: a service with incidental property is not taxed, while a sale of property is taxed on its full price, labor and skill included. States apply the test with different weights, so identical facts can produce opposite results across a state line, and the contract and invoice are the first evidence an auditor reads. Digital goods and cloud offerings have pushed legislatures toward statutory definitions of bundled transactions, digital products, and data processing, which now decide many cases the common-law test once governed, while the test itself still fills every gap the statutes leave open.Law as of Sep 26, 2026
- How does US sales tax differ from VAT and GST?A company that knows value added tax or goods and services tax well tends to arrive in the United States expecting a familiar system: one national registration, tax collected at every stage of the supply chain, input tax recovered on the return, and a single periodic filing. None of that holds. The United States has no federal sales tax and no national VAT. Forty-five states and the District of Columbia each impose their own sales and use tax, more than ten thousand local jurisdictions add rates on top, and each state requires its own registration, applies its own taxability rules, and expects its own returns on its own calendar. The tax is imposed once, at the retail sale to the final consumer, and there is no input credit. Exemptions do that work instead, above all the sale for resale exemption, and a seller that cannot produce a valid exemption certificate owes the tax itself. Purchases that escape sales tax are generally subject to use tax, which a business often must self-assess. Since South Dakota v. Wayfair, Inc. in 2018, states may require remote sellers with no physical presence to collect once their sales pass a state-set threshold, and marketplace rules shift that duty to platforms for the sales they facilitate. The recurring mistakes of foreign entrants follow directly from carrying VAT instincts across the border.Law as of Sep 26, 2026
- Entering voluntary disclosure? What a state-rate-only exposure estimate missesA multistate sales tax exposure estimate prices the decision to enter voluntary disclosure, sets the reserve, and in a purchase or sale sizes the escrow, and the common shortcut of taxable sales times each statewide rate is defensible as a first pass and unreliable as a final number. Many states layer city, county, or special-district tax on the state rate, and several make local jurisdictions administer their own share, so a state-rate-only estimate understates the liability where it matters most, misses local filing obligations, and distorts every decision built on it.Law as of Sep 28, 2026
New Jersey
1 articleNew York
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