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The World Needs Face Masks: What You Need To Know About Sales Tax When Selling New Products

Views:255     Author:Site Editor     Publish Time: 2020-09-29      Origin:Site

Because of the new coronavirus (COVID-19), face masks are must-have accoutrements these days. Take mask manufacturers as an example. COVID-19 has spawned a large number of new mask machine manufacturers. However, in this sensitive period, the quality of masks is the most important factor to consider, whether it is the mask manufacturer or the mask seller.


Urban, as a professional medical device company actively responding to the coronavirus, provides professional equipment services, mainly producing various types mask making machines, such as surgical mask making machine, fully automatic mask making machine, n95 face mask making machine and capsule filling machines, ect.

 77-1-sale tax

In addition to finding a reliable device supplier, sales and use taxes must be considered when new products are first produced or sold, or when sales of existing products suddenly surge.


In the United States, for example. Cloth face masks worn over the nose and mouth to protect people from spreading sickness are generally subject to retail sales tax in most states. In fact, they’re exempt (i.e., not taxed) in only a few.

·       Connecticut

·       Maryland

·       Pennsylvania

Puerto Rico is providing a temporary sales tax exemption for face masks and certain other products through April 30. Because these items are usually taxable, businesses that sell into Puerto Rico may still need to register with the tax department and comply with sales tax laws.


Whether a business needs to obtain a sales tax permit and collect and remit sales tax depends on nexus.


Physical nexus


If you’re new to business and you’re selling face masks in your community for the first time, you maybe need to obtain a sales tax permit and start collecting and remitting tax on your sales. Some states allow an exception for casual sales, like a one-time garage sale, but ongoing sales generally require a permit and tax collection. When in doubt, contact the state department of revenue and local government.


Once registered, tax generally applies to sales made anywhere in the state, including phone or online sales.


Economic nexus


If you want to expand your market by selling online, maybe collecting sales tax will be triggered in states where you have no physical presence.


Most states now enforce economic nexus, which bases a sales tax collection obligation solely on sales and/or transaction volume in the state. Of the 45 states with a statewide sales tax, only Florida and Missouri have not adopted economic nexus. Even some communities in Alaska enforce economic nexus for local sales tax.


Determining whether economic nexus has been established is tricky because each state’s economic nexus law is unique. For example, economic nexus is established as a result of:

·       One sale into Kansas

·       More than $500,000 in total combined sales of tangible personal property in California

·       More than $300,000 in cumulative total gross sales and more than 100 transactions in New York

Most states have an economic nexus threshold of $100,000 or 200 transactions. In other words, selling one mask to 200 different people in a state could trigger economic nexus, even if each mask sold for only $10.


Learn more about mask production and sales

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