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What is drop-shipping?
What is drop-shipping?
Updated over a week ago

In a traditional drop-shipping transaction, two separate sales occur simultaneously at the point the goods are delivered to a customer.

The first sale to occur is between the vendor and the drop shipping company. This sale is most likely a sale for resale from the vendor’s perspective. The vendor is billing the drop-shipper for the purchase price of the items that were then delivered to the customer.

Upon delivery, the second sale occurs. That sale is between the drop-shipper and the customer. This sale is documented by the sales proceeds the drop-shipper receives from the customer for the goods which were ultimately delivered.

Assuming that the customer is the end-user of the products sold, this second sale is a retail sale and is taxable as dictated by the laws of the state where the customer is located.

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