The place of sale determines the rate of sales tax to charge. The type of transaction involved, whether it is a sale of tangible personal property, sale of labor and services, or rental or lease of tangible personal property, also makes a difference.
Sales of Goods and Merchandise
Goods and merchandise sales are coded to the location where the customer receives them. Over the counter sales, where the customer receives the item at the retail location are coded to the retail store or outlet. Items that are shipped or delivered to the customer, either through the U.S. mail or a third party common carrier, are coded to the location where the customer receives them.
Labor and Services
Labor and services are coded to where they are performed. If an installation charge is normally added to the cost of an item, the entire charge for that item is coded to the site where it is installed. If the buyer picks up the item in person, the sale is coded to the retail outlet where the item was picked up.
In the case of repaired merchandise, if the buyer picks up the item at the repair facility, then the sale is coded to the location of the repair facility. However, if the repaired item is delivered or shipped to the buyer, then the total charge, including shipping and handling, is coded to the buyer's address.
Lease or Rental or Tangible Personal Property
Lease or rental of tangible personal property depends on the following:
If a single payment is made and the person renting the equipment (lessee) picks up the equipment at the location of the business renting the equipment (lessor), then the lessor's location determines the code and local tax rate.
If a single payment is made but the equipment is delivered to the lessee at another location, the code is determined by the location where the lessee receives the equipment.
If the item is leased for a length of time and periodic payments are made, the first payment is coded to the location where the lessee receives the equipment, normally the lessor's business location. All subsequent payments are coded to the location where the equipment is primarily used by the lessee.
Credit Reports, Abstract, Title Insurace, Escrow
The place of sale is, typically, the place where the buyer uses these services (buyer's location), not based on where the services are performed (SSB 5089, section 501, effective July 1, 2008)