In the US, One Drop charges sales tax for orders shipped to customer addresses based on two criteria:
- states where we have tax nexus (where we have offices, facilities, and staff) and
- states that do not exempt sales tax for medical devices
Given this, we currently charge sales tax for customers in California, Texas, and Illinois.
California and Texas are origin-based states so we are obligated to charge customers sales tax based on One Drop's location. These states only exempt sales tax on medical devices when the item is sold as part of a prescription. Since One Drop orders don’t accompany prescriptions or doctors orders, we are obliged to charge sales tax for customers in these states based on combination of state, county, city, and district tax rates.
Illinois allows medical devices taxed at a 1% reduced rate. Since Illinois is an origin-based state, sales tax for Illinois customers is based on our facility’s location and is reduced from the normal 10.25% rate to 9.25%.
New York exempts sales tax for medical devices, so we are not obligated to charge sales tax for NY customers.
Fun with taxes! Here's more: TaxJar: Origin-based and Destination-based Sales Tax Collection 101