Kintsugi Sales Tax Glossary
Sales tax glossary
Plain-English definitions of the sales tax, use tax and VAT terms sellers run into most, each with a short example and why it matters.
B
- Back taxesBack taxes are taxes that should have been paid in earlier periods but weren't, whether through error, oversight or unfiled returns.
- Bundled transactionA bundled transaction is a sale of two or more distinct products or services, some taxable and some not, for one price that isn't itemized.
C
- Click-through nexusClick-through nexus is a sales tax obligation created when a remote seller pays in-state residents commissions for referring customers through website links, and those referrals pass a set sales level.
- Combined sales tax rateA combined sales tax rate is the total rate charged at a specific location: the state rate plus any county, city and special district rates.
D
- Destination-based sourcingDestination-based sourcing is a rule that taxes a sale at the rate in effect where the buyer receives the item.
- Digital goodsDigital goods are products delivered electronically, such as e-books, music, movies, apps and downloadable software.
- District taxA district tax is a sales tax imposed by a special taxing district, such as a transit, stadium or public safety district, on top of state, county and city taxes.
- Drop shipping (sales tax)Drop shipping, for sales tax, is a sale where a retailer takes the customer's order and a third-party supplier ships the item directly to the customer.
E
- Economic nexusEconomic nexus is an obligation to collect and remit sales tax in a state based on the amount of sales into that state, even without a physical presence there.
- Exemption certificateAn exemption certificate is a form a buyer gives a seller to claim that a purchase is exempt from sales tax.
G
- Gross receipts taxA gross receipts tax is a tax on a business's total revenue, with few or no deductions for costs.
- GST (goods and services tax)A goods and services tax (GST) is a value-added tax on most goods and services, used under that name in countries including Canada, Australia, New Zealand, India and Singapore.
M
- Marketplace facilitatorA marketplace facilitator is a platform, such as Amazon, Etsy or Walmart Marketplace, that processes sales for third-party sellers.
- Marketplace sellerA marketplace seller is a business that sells products through a third-party platform, such as Amazon, Etsy or eBay, rather than only through its own store.
O
- Origin-based sourcingOrigin-based sourcing is a rule that taxes a sale at the rate in effect where the seller is located, rather than where the buyer receives the item.
- OSS (One Stop Shop)The One Stop Shop (OSS) is an EU VAT scheme that lets a business report and pay VAT on eligible cross-border sales to consumers across the EU through a single quarterly return in one member state.
R
- RemittanceRemittance is the act of paying collected sales tax to the state or local tax authority.
- Resale certificateA resale certificate is a document a buyer gives a seller to buy goods tax-free because the buyer plans to resell them.
- Reverse chargeThe reverse charge is a VAT rule that shifts responsibility for reporting VAT from the seller to the business buyer.
S
- SaaS taxabilitySaaS taxability is whether a state taxes software-as-a-service, meaning software accessed online rather than downloaded or delivered on physical media.
- Sales tax auditA sales tax audit is a state's review of a business's records to confirm it collected, reported and remitted the right amount of sales and use tax.
- Sales tax holidayA sales tax holiday is a limited period, set by a state, when certain items can be bought without sales tax or at a reduced rate.
- Sales tax permitA sales tax permit is a state registration that authorizes a business to collect sales tax from customers.
- Sales tax vs. use taxSales tax is collected by the seller at the time of sale, while use tax is owed by the buyer when sales tax wasn't collected on a taxable purchase.
- Streamlined Sales Tax (SST)Streamlined Sales Tax (SST) is a cooperative program among states to simplify and standardize sales tax administration.
T
- Tangible personal propertyTangible personal property is physical property that can be seen, weighed, measured, touched or moved, such as furniture, clothing and electronics.
- Taxability matrixA taxability matrix is a table that maps each product or service a business sells to its tax treatment in each jurisdiction, such as taxable, exempt or partially taxable.
V
- VAT (value-added tax)Value-added tax (VAT) is a consumption tax charged at each stage of production and distribution.
- Voluntary disclosure agreement (VDA)A voluntary disclosure agreement (VDA) is a formal arrangement in which a business comes forward to a state about taxes it should have collected or paid in the past.
This glossary is general information, not tax or legal advice. Rules vary by state and country, so check the linked guides and official sources for the jurisdictions you sell into.
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