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How indirect taxes work in transactions

These examples demonstrate how indirect taxes work in various transactions.

In-store purchases

Oliver, a consumer, buys a cell phone at Alpha Phones, a store located in New York City. Oliver pays the sales tax at the time of purchase. The store gives the tax collected from Oliver to the New York taxing authorities in the next tax filing period.
In-store purchases and indirect taxes
Icons depicting a consumer to a phone at a store. Along with a cash register the store and then lastly the state authorities.

Online purchases

Emma, a consumer who resides in Pennsylvania, buys a lamp online from Beacon Lights. Emma pays the sales tax, which is based on the destination of the lamp, at the time of purchase. Beacon Lights gives the tax collected to the Pennsylvania taxing authorities in the next tax filing period.
Online purchases and indirect taxes
Icons depicting a consumer buying a lamp online. Along with a cash register the online site and then lastly the state authorities.

Purchases from a reseller with an exemption certificate

Eco Electronics, a reseller, buys televisions from a manufacturer in Oklahoma. The televisions will be resold in the Eco Electronics store in New Jersey. Eco Electronics presents the manufacturer with an Oklahoma resale exemption certificate. Eco Electronics collects the sales tax when the televisions are sold in their New Jersey store. Eco Electronics reports the exempt sales tax on a tax return filed with Oklahoma and gives the tax collected to New Jersey when the televisions were sold.
Icons depicting a reseller buying televisions. Along with an icon depicting their exemption certificate, and then lastly the state authorities for Oklahoma and New Jersey.

This article applies to:

  • Product: ONESOURCE Determination,ONESOURCE Indirect Tax

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