Online selling of products and services has always been in the vanguard of sales tax obligations. The situation has only gotten more complicated in the five years since the Supreme Court unleashed economic nexus with the Wayfair decision.

When it comes to sales tax, “manufacturing” is often defined as a physical application of materials and labor to change the characteristics of tangible personal property (TPP). Seems clear, but what about your tax obligations and exemptions?

Every state has nuances on how sales tax applies to the manufacturing process, equipment and materials. These gray areas can create big exposure for your business.

Many manufacturers, wholesalers, and distributors believe they have minimal sales tax obligations due to the likelihood of sales tax-exempt transactions. However, there are numerous pitfalls to be aware of.