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Sales Tax Glossary

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Glossary

Sales Tax Glossary

Plain-English definitions of the sales tax terms multi-state sellers actually run into. Each entry is answer-first and cited to primary sources.

1. Nexus & obligations

Nexus & obligations

Economic Nexus

Economic nexus lets a state require sales tax collection once your remote sales cross its thres

Sales Tax Nexus

Sales tax nexus is the link between your business and a state that requires you to collect its

Physical Nexus

Physical nexus is sales tax obligation from a tangible presence — office, employees, or invento

Click-Through Nexus

Click-through nexus makes you collect a state’s sales tax when in-state affiliates refer sales

Marketplace Nexus

Marketplace nexus shifts sales tax collection to platforms like Amazon and Etsy.

Trailing Nexus

Trailing nexus keeps your sales tax collection duty alive for a period — often a calendar year

Wayfair Decision

South Dakota v.

Quill v. North Dakota

Quill v.

2. Tax types & base

Tax types & base

Use Tax

Use tax is the complementary tax you owe when you use taxable goods in a state but no sales tax

Sales Tax vs Use Tax

Sales tax is collected by the seller at purchase; use tax applies when no sales tax was charged

Seller’s Use Tax

Sellers use tax is the tax a remote, out-of-state seller collects and remits on sales into a st

Consumer Use Tax

Consumer use tax is the tax a buyer self-assesses and remits when no sales tax was charged — co

Gross Receipts Tax

A gross receipts tax is a tax on a business’s total revenue — like Washington’s B&O or Ohio’s C

Transaction Privilege Tax

Transaction privilege tax is Arizona’s sales-tax equivalent — a tax on the privilege of doing b

Tangible Personal Property

Tangible personal property is physical, movable property — the default taxable category for sal

Taxability

Product taxability is whether a given product or service is subject to sales tax in a given sta

SaaS Taxability

Is SaaS taxable? It depends on the state — roughly 20+ states tax Software-as-a-Service while o

Digital Goods Taxability

Are digital products taxable? It varies by state — some tax all digital goods, some none, and s

Bundled Transaction

A bundled transaction sells taxable and non-taxable items for one non-itemized price.

3. Sourcing & rates

Sourcing & rates

Destination-Based Sourcing

Destination based sales tax sets the rate by the buyer’s ship-to address.

Origin-Based Sourcing

Origin based sales tax sets the rate by the seller’s location, not the buyer’s.

Origin vs Destination

Origin vs destination sourcing decides which jurisdiction’s rate applies to a sale.

Situs

Tax situs is the location assigned to a transaction for tax purposes — it decides which state o

4. Compliance lifecycle

Compliance lifecycle

Sales Tax Permit

A sales tax permit is the state license that authorizes you to collect sales tax.

Sales Tax Registration

How to register for sales tax: once you have nexus, register with the state DOR — directly or v

Resale Certificate

A resale certificate lets a buyer purchase inventory tax-free for resale.

Exemption Certificate

An exemption certificate documents a tax-free sale — resale, nonprofit, manufacturing, or gover

Sales Tax Exemption

A sales tax exemption makes a sale not subject to tax — based on the product, its use (resale,

Sales Tax Return

A sales tax return is the periodic filing reporting tax you collected.

Filing Frequency

Sales tax filing frequency is how often a state makes you file — monthly, quarterly, or annuall

Prepayment

Sales tax prepayment is a required advance payment of estimated tax before your return is due,

Zero Return

A sales tax zero return is a return you file even when you collected $0.

Remittance

Sales tax remittance is paying the tax you collected to the state.

5. Audit & remediation

Audit & remediation

Sales Tax Audit

A sales tax audit is a state DOR review of your records.

Audit Defense

Sales tax audit defense is professional representation during a state audit — challenging sampl

Voluntary Disclosure Agreement

A voluntary disclosure agreement lets you report past uncollected sales tax in exchange for a l

Back Taxes / Backfiling

Backfiling means filing overdue sales tax returns for past periods after you discover an unmet

Nexus Study

A nexus study reviews where your business has physical and economic nexus, then maps your sales

Penalty & Interest

Sales tax penalties are charges states add for filing or paying late, plus interest on the unpa

6. Marketplace & ecom

Marketplace & ecom

Marketplace Facilitator

A marketplace facilitator like Amazon or Etsy must collect and remit sales tax for its third-pa

Marketplace Seller

A marketplace seller sells through a platform like Amazon or Etsy.

Drop Shipment Tax

Drop shipping sales tax involves three parties — customer, retailer, supplier.

Streamlined Sales Tax (SST)

Streamlined Sales Tax (SST) is a multi-state agreement that simplifies registration, definition

Certified Service Provider

A Certified Service Provider (CSP) is an agent certified under Streamlined Sales Tax to handle