A guide for manufacturers and distributors for: Accurately calculating sales and use tax and reducing audit risk

To talk about sales and use tax for manufacturers and distributors, let's define them first.

Manufacturers 

Manufacturing is typically defined as an operation of producing a new product, article, or commodity that is different, and that has a distinctive name, character, or use from raw material, and that is intended to be sold either as a finished product or a component of a future finished product. Not all manufacturers use raw materials in their processes, of course. Some, like automobile manufacturers, buy parts or components from suppliers and then manufacture, machine, or fabricate those parts into a new, complete product. These companies still operate as "manufacturers", as defined by tax authorities.
NOTE: Certain industries that do manufacture goods, such as pharmaceuticals, tech, and construction, face industry-specific tax rules that will not be covered in depth in this white paper. 

Distributors

Distributors, for tax and legal purposes, are often defined as any individual, partnership, corporation, association, or other legal relationship that stands between the manufacturer and the retail seller in purchases, consignments, or contracts for sale of consumer goods. 

When it comes to sales and use tax, manufacturers and distributors generally face complex and unique obligations.

In this paper, we examine some of the most important aspects that may affect a company's sales and use tax liability. In particular, we focus on exemptions, research and development, transfers, and trade shows. Along with exemptions, we cover the tracking of exempt certificates and why it is critical to provide proof of the exemption. Then, we look at the sales tax nexus to review where taxes may be due and how the Supreme Court's Wayfair decision has affected sales tax nexus, and how that can affect your obligations. The paper concludes with steps you can take to reduce your overall sales and use tax risk and liability.