Sales Tax for online purchases can be confusing, to say the least. Ever since the South Dakota v Wayfair Supreme Court decision in July 2018, sales tax laws for online companies have been constantly changing. We want to make sure we keep you up to date, so we’ve put together a list of FAQs about how these changes may affect your CandleScience purchases. If you have a question not answered here, let us know at firstname.lastname@example.org or contact us through our Support page.
Q: Will the South Dakota v Wayfair court decision affect my CandleScience orders?
A: Most likely. In July of 2018, the state of South Dakota sued Wayfair for non-payment of sales tax on online orders shipping to South Dakota. This lawsuit went to our nation's highest court where it was decided to allow individual states to collect sales tax on purchases made from companies not located within that particular state (or in other words, online businesses). All states are now allowed to collect sales tax on these out-of-state sales. Most states have elected to do so, but not quite all of them.
Every state has different laws as to when/how businesses must start collecting sales tax on orders being shipped to their state. To remain compliant with state laws, CandleScience will collect sales tax for states that require us to do so.
Q: I haven’t seen sales tax on my orders yet. When will you start charging sales tax?
A: We first began collecting sales tax in January of 2019 in the states that required it, and have added more states on a gradual basis as it became necessary. If your business isn’t sales tax exempt but you still haven’t seen any taxes on your orders, we have not started collecting sales tax in your state yet.
Q: What states are affected?
A: Effective December 2019, we are charging sales tax on orders shipping to: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
At this time, we are NOT required to charge sales tax on orders shipping to the following states/territories: Alaska, Delaware, Florida, Hawaii, Montana, New Hampshire, Oregon, Mississippi, Puerto Rico, and Washington D.C. We will notify customers in these states via email in the event of any changes.
Q: I have a resale certificate or equivalent documentation that exempts my business from paying sales tax in my state. How can I be exempt from sales tax on future CandleScience orders?
A: That’s great! We have a streamlined 2-step process for validating and uploading your resale information. We will apply your tax-exempt status to your account once the proper documentation has been received. To submit your tax documentation, click here. (You must be logged in to access this form).
Q: My business is registered with the IRS and I have an FEIN (Federal Employer Identification Number). Am I exempt from sales tax?
A: Not necessarily. Sales tax is determined and regulated at a state level, and your FEIN is federal. Your FEIN shows you are a registered business, but does not mean you are automatically exempt from paying sales tax. The laws in every state are a bit different, but most states will require you to apply for an additional license or certificate (Resale certificate, Retailers permit, etc.) to be exempt from paying sales tax. For more information on how to become exempt from sales tax in your state, contact your state’s Department of Revenue.
Q: What is a resale certificate and how do I get one?
A: A resale certificate is issued by your state department of revenue and certifies your business makes purchases for the purpose of manufacturing or resale. Sales taxes should only be collected on a finished good to the final purchaser, and so the purchase of materials or wholesale goods should be exempt from sales tax. You will need to contact your state or local department of revenue to apply for a resale certificate. For more information, see here.
Q: I’m a nonprofit organization. Am I sales tax exempt?
A: Again, not necessarily. Every state has different laws when it comes to nonprofits and sales tax exemption. In some states, a nonprofit status may be enough to grant you sales tax exemption, but others will require an additional license or form. If you’re a nonprofit and unsure of your sales tax exemption status, please reach out to your state’s Department of Revenue for more information.
Q: I want to pick up an order in NC or NV. Will my order be taxed?
A: Yes, unless you have a valid resale or exemption certificate on file with us prior to placing your order.
Q: My state-specific exemption form is asking me to enter seller information. What do I enter?
You can leave it blank! We’ll take care of it on our end. If for some reason your state isn’t allowing you to leave it blank, please reach out to our Customer Support team.
Q: I do not have a business. Will my orders be taxed?
A: If you live in one of the states listed above where we are collecting sales tax, yes. To remain compliant with the sales tax laws in your state, we must collect sales tax on your orders unless you have a valid exemption or resale certificate on file with us.
Q: Will I have to submit my exemption or resale certificate every time I want to place an order?
A: Not at all! Sales tax will automatically be removed from your future orders once your exemption information has been received and validated. Keep in mind that it may take up to 4 days for our compliance team to verify and upload your information, so it’s best to submit your tax documentation to us as soon as possible.
Q: I submitted my tax-exemption information and my CandleScience account is exempt, but I’ve moved to a new state since then. Do I need to submit a new Resale Certificate?
A: Most likely, yes. Sales tax exemption is regulated by the state, and our tax processor reads exemptions according to the state that issues it. Therefore, your exempt status only exempts you on orders shipping to the state it’s associated with. If you’re going to start shipping orders to a new state, we’ll need to have exemption information on file for that state.
For example, if you lived in Arkansas and submitted your exemption information but then moved to Michigan, you would need to submit your tax exemption information again with your new Michigan Resale certificate. This will allow you to continue to be tax-exempt on future orders that ship to your new address in Michigan.
***The only exception here is if you happen to move to a state/territory where we aren’t currently required to charge sales tax (Alaska, Delaware, Florida, Hawaii, Mississippi, Montana, New Hampshire, Oregon, Puerto Rico, and Washington D.C).
Q: I pick up my orders in NC/NV and my CandleScience account was tax-exempt several years ago, but when I go to place an order now, I’m being charged sales tax. Why?
A: Great question. If you were previously tax-exempt in NC or NV prior to January 2019, you will need to re-submit your information so we can upload it to our new system.
Before the South Dakota v Wayfair ruling, we were only required to charge sales tax on orders in states where we had a physical presence (NC and NV). Therefore, we only had to process tax exemptions for a handful of states. Since the ruling, we’ve had to switch to new software to be able to handle a large number of tax exemptions.
You can submit your sales tax exemption information here. (You must be logged in to your CandleScience account to access this form).
Q: What is "use tax"? Is it the same as sales tax?
A: Sales tax is a tax assessed on the sale of a product to the end-user. Raw materials used to manufacture a product and goods purchased at wholesale can be purchased without paying sales tax if you are registered as a reseller.
If, however, you purchase materials free of sales tax but do not use the items in your manufacturing process or for resale, you are probably required by your state or local taxing authority to pay a "Use Tax" on those materials because you became the end user.
For example: You are a CandleScience customer buying soy wax and fragrance to make candles, and you have a resale certificate, so we would not collect sales tax from you on your purchases. But let's say you purchase a Candle Making Kit to give to a friend as a gift. In that case, the kit was not used in the course of your business, and since you purchased it tax-free, you will be obligated to report that purchase to your state or local taxing authority as Use Tax.
You'll need to contact a tax advisor to help you if this is not something you are familiar with, as each state is different!
Q: I have my original state-issued Seller's Permit (or equivalent), do I need to fill out another form to become tax-exempt with CandleScience?
A: Yep! We have a 2-step process for submitting your tax-exemption information.
1) Fill out our online form. This form is what allows us to upload your information to our tax processor.
2) At the top of the form mentioned in step 1, attach or fax a signed Resale Certificate or your state-specific form (for a list of state-specific forms, click here and scroll down.) Attaching the form is strongly preferred.
Q: I need to place an order now! Can you refund my sales tax if I submit my resale certificate today?
A: Unfortunately, we are unable to refund the sales tax paid on orders you place before your exemption documentation has been submitted. When your order is processed in our system, the sales tax is automatically remitted to your state. Our process for verifying and uploading exemptions can take up to four business days depending on the volume of exemptions we are currently receiving, so we strongly recommend submitting the documentation as soon as you can to avoid any delays.
If you go to place an order and see you are being charged sales tax, please contact our Customer Support team before you place the order so that we may assist.
Q: Are you able to expedite the processing of my resale documentation?
A: Unfortunately, we can’t guarantee it. It’s definitely possible that our compliance team will be able to process your information faster than the given window of 4 business days, but it all depends on the volume of exemptions we are currently receiving.
Q: What do you do with my information once I submit it?
A: First, we verify that the information you enter into our online form matches the information supplied on the signed state-specific/Resale form you attach. If this information matches, we then contact your state to verify that your exemption is active and valid. Then we upload the information to our sales tax software so that your account will reflect your tax-exempt status. All information received is stored securely and never shared with anyone, except as required by law.