Sales & Use Tax

There is no federal Sales and/or Use Tax in the US. All but five states impose sales and use taxes on retail sale, lease, and rental of many goods, as well as some services. Many cities, counties, transit authorities and special purpose districts impose an additional local sales or use tax.

In the United States the Internal Revenue Service (IRS) is comparable with the UK’s HM Revenue & Customs (HMRC), but taxation does not stop with the Federal Government. There are State taxes, County taxes, City taxes… there are taxes on individuals and corporate entities.

E-commerce represented 9.8 percent of all US retail sales in the third quarter of 2018, a slice of the retail pie that states are increasingly able to capture in the aftermath of the Supreme Court’s decision which eliminated the physical presence requirement for substantial nexus.

If you are selling to resellers, you do not have to collect Sales & Use Tax (comparable with Value Added Tax (VAT), but much simpler and much lower).

If you retail directly to consumers (i.e. the people who will use your product), in Florida (where your sales operation is based) you will have to collect Sales & Use Tax. Subject to confirmation, this tax will probably be seven percent. Sales & Use Tax returns are much less complex to complete than the UK’s Value Added Tax (VAT).

If you sell directly to consumers (i.e. the people who will actually use your product), outside the state of Florida, you will have no Sales & Use Tax to collect. It is the responsibility of such buyers to rush to the office of their local Tax Collector to declare what they bought and offer to pay the tax. Understandably, not all people do this!

American people, companies, and organizations have a demonstrable (sometimes mandatory) preference for buying from US companies with a US address and US telephone number. It is not difficult (we make it easy), time-consuming (ten business days is typical), or expensive (say about £1,431) to incorporate (and £281 per month) to operate a US company and establish a US address with telephone service answered by US citizens in a US time-zone. With ExportAction’s assistance, establishing and operating a UK subsidiary in the US is straightforward, economical and, most usually, takes only a matter of days.

Taxpayer Identification Number (TIN)

Confusingly, this number is identical to an organization’s employer identification number (EIN).