What Is a State Sales Tax Number and How to Get One

A state sales tax number is a unique identifier issued by state tax authorities, allowing businesses to collect sales tax from customers. It serves as the official authorization for a business to act as a sales tax collector on behalf of the state.

Purpose of a State Sales Tax Number

A state sales tax number, often referred to as a sales tax permit or seller’s permit, represents a business’s legal authorization to collect sales tax. This unique identifier is assigned by the respective state tax authority. Its purpose is to enable businesses to legally collect sales tax from customers on behalf of the state and remit those collected taxes.

Without this number, a business cannot legally collect sales tax from consumers. Obtaining a valid sales tax permit is a necessary step for compliance, allowing businesses to participate in the state’s sales tax system.

Businesses Requiring a Sales Tax Number

Businesses that need a state sales tax number include those selling tangible personal property or taxable services at retail. This applies to brick-and-mortar stores, online sellers, home-based businesses, and temporary sellers at events like craft fairs or pop-up shops.

The requirement to obtain a sales tax number is triggered by “nexus,” which signifies a sufficient connection between a business and a state. Nexus can be established through physical presence, such as having an office, warehouse, or employees. Economic nexus, established by meeting certain thresholds of sales volume or transaction count, also obligates businesses to register, even without a physical presence.

Preparing to Apply

Before applying for a sales tax number, gather specific information and documentation. This includes the business’s legal name, any “doing business as” (DBA) name, and both physical and mailing addresses.

Applicants need their Federal Employer Identification Number (EIN) or Social Security Number (SSN) if operating as a sole proprietor. Business structure information, such as sole proprietorship, partnership, LLC, or corporation, is required. Details about owners or officers, including their names and SSNs, are necessary, along with the business type or industry. An estimate of monthly or annual sales and the anticipated start date of sales are also requested.

Submitting Your Application

After compiling all necessary information and completing the application form, submit it to the state’s tax authority. Most states offer online application portals on their Department of Revenue or Tax Commissioner’s website, which is the most efficient method. Some states may also accept applications via mail, though this entails longer processing times.

Upon successful online submission, businesses receive a confirmation number or an email notification. Processing time for applications varies, from a few business days to several weeks, with online submissions generally processed faster. Once approved, the sales tax number or permit is issued, authorizing the business to begin collecting sales tax.

Responsibilities After Obtaining the Number

Obtaining a state sales tax number comes with ongoing compliance obligations. A responsibility is to collect the correct sales tax rate from customers on all taxable sales. This collection must adhere to the specific tax rates applicable to the jurisdiction of the sale.

Businesses are required to file sales tax returns periodically, often monthly, quarterly, or annually, even if no sales tax was collected. The filing frequency is determined by the state based on the volume of sales. Collected sales tax must then be remitted to the state tax authority by the designated due dates, typically around the 20th of the month following the reporting period. Maintaining accurate records of all sales, collected taxes, and any exemption certificates is a continuous requirement for audit purposes.