Who’s Your Customer?

Manufacturing companies usually don’t have to collect sales tax the way that retail companies do. As long as you’re manufacturing tangible goods which you sell to retailers who then sell those goods and collect sales tax on them, you don’t have to collect sales tax.

But are those retailers actually your only customers?

Many manufacturers actually sell to end-user consumers at least occasionally. Do any of these situations sound familiar? You sell boats to companies that sell boats to consumers. But you also sell replacement boat seats to consumers online. You sell toys through boutique toy stores with exclusive sales territories. But you also sell directly to consumers who have no official seller in the area where they live, if they contact the company to request such a sale. You sell candy to mass market and other retailers across the country. You also sell imperfect pieces in generic packaging at an outlet located in your warehouse. You sell artisan beer to bars and liquor stores. You also sell cases and labeled merchandise to people who tour your brewery. You sell cosmetics through mass market retail. But you sell discontinued items online. You sell exercise equipment to retailers. You also sometimes sell large quantities of your products to schools and other institutions at special prices.

In none of these cases does the manufacturer become a retailer. There are no helpful sales associates and no cash registers.

But in each case, the company should be collecting sales tax. Manufacturers are not exempt from collecting sales tax as an entity, in the way that a charitable organization might be. They’re just usually conducting business-to-business transactions, where sales tax doesn’t apply. If you make sales to consumers, then you have to collect sales tax just as your retailers do.

Your accountant and your legal adviser will be able to help you determine exactly which transactions require you to collect sales tax. Then Sales Tax DataLINK will allow you to simplify those transactions and filing, and make sure your filing is accurate.