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OnDemand Course

Drop Shipments: Understanding Sales Tax Treatments of the Seller, Shipper, and Customer

Get an update on the sales tax laws for drop shipments.

Many retailers and suppliers engage in transactions that are known as drop shipments without full consideration of the tax effects. In light of the Supreme Court's decision in South Dakota v. Wayfair, Inc., et al., nearly every state that imposes sales and use taxes has amended their laws, regulations, and guidance to force out of state retailers and suppliers to collect sales taxes on their behalf. Despite some commonalities, the various laws are frequently inconsistent and counterintuitive. This topic will help you identify drop shipments and determine when your business or client may need to collect sales taxes in the various states, specifically focusing on the federal constitutional underpinnings and the ways states have chosen to update their laws, regulations, and guidance, as well as determine the best way to bring their business or client into compliance.

Learning Objectives

  • You will be able to differentiate between the responsibilities of the customer and retailer of a Drop Shipment
  • You will be able to differentiate between the responsibilities of the wholesaler and supplier of a Drop Shipment
  • You will be able to identify various tax rates
  • You will be able to differentiate between the various nexus types.

Runtime: 102 minutes
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

What Is a Drop Shipment and Why Are They Used?

What Is the Location of the Sale in a Drop Shipment?

Tax Treatment of the Parties

  • Retailer
  • Supplier
  • Customer

How Much Is the Sales/Use Tax?

  • Final Sales Price
  • Are Shipping and Handling Taxable?

What Is Nexus and How Much Is Enough to Be Substantial?

  • Physical Presence
    • How Substantial Is Substantial?
    • Trailing Nexus How Long Do I Have Nexus?
    • Affiliate Nexus
    • Clickthrough Nexus
    • Economic Nexus
    • Physical Presence Requirement Was Eroding Before Wayfair
    • South Dakota v. Wayfair, Inc., et al.
  • Reporting and Notification Regimes

Am I in Compliance?

  • Two Questions:
    • Are My Goods/Services Taxable in Each Jurisdiction?
    • Do I Have Substantial Nexus in Each Jurisdiction?
  • Options to Become Compliant
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

This course was last revised on October 8, 2020.

Call 1-866-352-9540 for further credit information.

  • CPE/NASBA - QAS Self Study 2.6 including Taxes 2.6
     
  • Lorman Education Services is registered with the National Association of State Boards of Accountancy (NASBA) as a QAS Self Study sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: https://www.nasbaregistry.org/cpas/complaints. For more information regarding administrative policies such as complaint and refund, please contact our offices at 866-352-9539. CPE Credit: Maximum Credit Hours: 2.6 each session (based on a 50 minute credit hour). You must attend at least 50 minutes to obtain credit. Field of Study: Taxes for 2.6 hours. Prerequisite: basic knowledge of taxation. Level of Knowledge: Intermediate. Teaching Method: Seminar/Lecture. Advance Preparation: None. Delivery Method: QAS Self Study. Please refer to the information in this advertisement for outline, course content and objectives. Upon completion of this course, you will receive a certificate of attendance. Final approval of a course for CPE credit belongs with each state's regulatory board.
     
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Matthew E. Foreman, J.D., LL.M.

Matthew E. Foreman, J.D., LL.M.

Law Offices of Matthew E. Foreman, P.C.

  • Managing attorney at Law Offices of Matthew E. Foreman, P.C.
  • Practice is limited to taxation
  • Conducts regular seminars and workshops on a variety of areas in taxation, specifically tax considerations for businesses entering the United States and sales and use taxes post-Wayfair
  • Admitted to practice law in New York State and admitted to practice before the United States Tax Court; New York City Bar Association; member, State and Local Tax Committee; chair, Subcommittee on Standards of Review and Statutory Interpretation; member, Subcommittee on Continuing Legal Education; member, Emerging Companies and Venture Capital Committee; New York State Bar Association; member, Tax Section
  • Rated as a New York Metro Rising Star by SuperLawyers in the field of taxation
  • LL.M. degree in taxation, New York University School of Law; J.D. degree, The Pennsylvania State University, Dickinson School of Law; B.S. degree, University at Albany, State University of New York
  • Can be contacted at 212-426-3841 or [email protected]
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Why Lorman?

Over 33 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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Product ID: 408116
Published 2020
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