Understanding Tax Exemptions and Taxables
Where does a sale occur?
There is not a uniform sourcing rule across the US but generally it is where tangible goods are delivered or where a
service is performed or the benefit is received.
-It is critical to "source" the sale to the correct jurisdiction because tax rates vary drastically among states and localities.
―
For example, a sale that is “sourced" to the City of Chicago is 10.25 percent consisting of:
-
Illinois state sales tax is 6.25 percent
―
County sales tax 1.75 percent
City sales tax is 1.25 percent
Regional Transportation Authority rate is 1 percent
Outside of the jurisdictional boundary of the City of Chicago but within Cook County, the tax rate may only be the
state and the county level tax.
For sales that are shipped, retailers in the US generally use tax rate software (either within their tax engine or within
compliance software) to determine what tax rate is owed based on data elements gathered during the sale (i.e. "ship
to" address). Over the counter sales are based on the rate of the store location.
KPMG
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.
10View entire presentation