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Why are there Business-to-Business and Business-to-Customer classifications of Tax Codes?


You want to know why some tax codes for items like software, hardware, clothing, and school supplies include almost identical descriptions, but one is for business-to-business and one is business-to-customer.




  • Business-to-business means sales to business entities
  • Business-to-customer means sales to home consumers
  • Codes within these categories generally have very similar code numbers and almost identical taxability, separate designations exist because:
    • Sales tax holidays usually apply tohome consumers only and typically include back-to-school related items, like software, hardware, clothing, and school supplies
    • For software/hardware some states restrict non-taxable status (exemptions) to software sold for business use only.

Next steps

For more information, see manage product taxability.