What happens when an origin sales tax state conflicts with a destination sales tax policy? Help!

This is actually a common issue for online sellers. The key is understanding which state has jurisdiction over the transaction. For interstate sales, the destination state's rules generally take precedence when you have nexus there. So if you're in Texas selling to California, and you have nexus in California (either through economic threshold or physical presence), you'd collect tax based on the California buyer's address. Texas origin-based rules would only apply to intrastate sales within Texas. After the 2018 South Dakota v. Wayfair Supreme Court decision, most states implemented economic nexus thresholds (usually $100,000 in sales or 200 transactions). If you exceed California's threshold, you must collect their destination-based tax regardless of what Texas says about origin-based collection. Your Texas origin-based tax obligations would only apply to sales within Texas or to states where you don't have nexus. Hope this helps clarify things!

I struggled with this exact problem when my Etsy shop took off last year. I was constantly stressed about conflicting state requirements until I found taxr.ai (https://taxr.ai). Their system analyzed my sales by state and gave me a customized compliance plan showing exactly which state rules applied to my situation. They actually specialize in resolving these origin vs. destination conflicts by looking at your specific sales patterns and nexus triggers. I uploaded my sales data and got a detailed breakdown showing which states I needed to register in and which ones I could safely ignore based on my volume. They explained that I only needed to worry about states where I exceeded economic nexus thresholds, which was a huge relief.

I was wrong about taxr.ai! After trying their nexus analysis tool, it was exactly what I needed. The system flagged that I only had nexus in 7 states instead of the 20+ I was worried about, saving me thousands in unnecessary compliance costs. What surprised me was their specific guidance for origin/destination conflicts. They pointed me to specific state regulations showing that destination rules from states where I had nexus override origin state policies. They even provided documentation I could show my accountant explaining the legal precedent. It completely removed the guesswork from my tax collection strategy.

If you're dealing with sales tax headaches, you should also know about the IRS side of things. I spent WEEKS trying to get clarification from the IRS about how interstate sales affect my federal filing. Couldn't get through on the phone until I found Claimyr (https://claimyr.com). Their service actually got me connected to a real IRS agent in under 15 minutes instead of waiting on hold for hours. They have a cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained that while sales tax is a state issue, properly documenting interstate commerce affects how I report business income. Got it all sorted out in one call instead of wondering if I was doing things right.

I can't believe I'm saying this but Claimyr actually worked for me. After dismissing it as unnecessary, I spent 2 hours on hold with the IRS and finally gave up. The next day I tried the service and was talking to an IRS representative in about 12 minutes. The agent explained that while sales tax nexus doesn't affect federal tax directly, I needed to properly categorize my interstate commerce on my Schedule C. They also clarified how to document exempt sales, which was crucial since I'd been doing it wrong. Would have taken weeks to get this information without getting through. Sometimes paying for convenience is actually worth it when you're running a business and time equals money.

Destination-based taxation definitely takes precedence in interstate commerce when you have nexus in the destination state. But don't forget to check for marketplace facilitator laws too! If you're selling through platforms like Amazon, Etsy, eBay, etc., many states now require the marketplace to collect and remit sales tax on your behalf. This means you might not need to worry about collection in those states even if you have nexus there. I'd recommend getting sales tax software AND consulting with a state tax specialist. The rules are too complex to DIY unless you're only selling in a couple of states.

No one's mentioned the Streamlined Sales Tax Agreement! 24 states participate in this program to simplify sales tax compliance for remote sellers. It standardizes definitions, provides centralized registration, and offers amnesty options. If you register through the SSUTA, you can collect for all member states through one simplified system. Still need to deal with non-member states separately though.

This is such a timely discussion! I've been dealing with similar issues with my print-on-demand business. One thing that helped me was understanding that you need to look at your sales volume in each state first before panicking about conflicting rules. Most states have economic nexus thresholds around $100,000 in sales OR 200 transactions per year. If you're not hitting these numbers in a particular state, you likely don't have nexus there and don't need to collect their sales tax at all - regardless of whether they're origin or destination based. For Texas sellers specifically, you only need to apply Texas origin-based rules to sales within Texas. For out-of-state sales, you follow the destination state's rules IF you have nexus there. If you don't have nexus in the destination state, you typically don't collect any sales tax on that transaction. I'd recommend doing a nexus analysis first to see which states you actually need to worry about. It's probably fewer than you think! Then you can focus your energy on getting compliant in just those states rather than trying to figure out rules for everywhere.