With recent heightened discussions about the federal government’s imposition of tariffs on imports, the question is whether retailers need to collect sales tax on tariff charges passed through to customers – even if those charges are listed separately on the invoice and not included in the initial taxable price of the goods?

A comprehensive review of states’ specific tax laws are necessary for thorough guidance, but California’s and New York’s policies can serve as valuable starting points.

• California’s Stance: California provides guidance that differentiates taxability based on who is the “importer of record.” If the buyer is the importer and pays the tariff directly, it’s not included in the seller’s taxable sales amount.
• New Jersey’s Stance: New Jersey specifically states that charges passed along to the consumer, including tariffs, are subject to sales tax as part of the taxable sales price, even if separately stated.

Potential consequences of non-compliance: Failing to collect sales tax on tariff charges, where applicable, could result in liability for the seller, including potential penalties and interest.