In some states, the sales tax is based wholly or in part, on the Origin (Ship FROM) Address in a transaction. Rather than the more common practice of basing sales tax on the Destination (Ship TO) address.
- Origin sourcing states apply sales tax to products based on their point of origin, rather than the destination address, on intrastate transactions (transactions inside the same state).
- For example, if the same product was shipped from Springfield to Chicago, both in Illinois, the tax would be based on the Springfield rather than Chicago.
- Interstate transactions (transactions between states) follow normal destination sourcing. For instance, if a product was shipped from New York to Chicago, the tax applied would be based on the Chicago location.
- The following states have origin-based sourcing:
- New Mexico
- Mixed Sourcing:
- Both Texas and California used mixed sourcing. Both the origin and destination addresses are used to calculate sales tax on intrastate transactions.
- In Texas the origin address is used first, but if the local tax rate from the origin address is less than 2%, the destination address is used to apply additional local tax up to the state-mandated 2% limit.
- In California, the county portion of the tax is origin-based, but the cities and special tax jurisdictions (STJ's) are destination-based.
- In all of these origin-based states, Avalara AvaTax applies this logic to products only (both digital and tangible personal properly). Services are typically taxed based on the destination address.