A sale may be defined as any transfer of title, transfer of possession, or transfer of title and possession, depending on the state. Title transfer and possession transfer may take place at different times and in different jurisdictions. This makes it difficult to determine when and where a sale has occurred in two situations:

Interstate Commerce Transactions,
&
Intrastate Commerce with Local Option Taxes (in some cases).

The taxing authorities of either the originating or destination jurisdiction may look to the sales contract, method of payment, terms of payment, method of delivery, terms of delivery, or other factors to assess point of sale, and thus determine the jurisdiction that will be allowed to tax the transaction. State and local law will generally assign tax rights to the state or locality of origination or destination. If your transaction is interstate, both the originating state and the destination state may have jurisdiction over tax on the transaction. You should also see the Reciprocity topic discussed on this web site.

While creating difficulty for you to administer, these transfer issues also present some tax planning opportunities. If the destination use tax rate is lower than the sales tax rate at the origination point, the buyer will usually lower their effective tax rate by transferring title and possession at the destination.

Feel free to call or e-mail us to discuss any tax issues you may have.

1.866.688.9472
(or local 1.785.876.2426)

Sales Tax Advisors, Inc.
9168 Village Lane
Ozawkie, KS 66070-6102