Intermediate Quick Answer
Do I owe sales tax when I invoice, when I ship, or when I get paid?
⚡ TL;DR
Sales tax is owed when goods ship — not when you invoice or when payment arrives. A sale shipped March 28 belongs on the March return regardless of net-30 terms. Invoice date and payment date are both irrelevant to which filing period a sale falls in.
When you ship is when you owe. Invoice date and payment date are both irrelevant to which filing period the sale belongs in.
Key takeaways
- Taxable event = shipment date for most ecommerce sales in most states; this is when title and risk of loss transfer to the buyer
- Invoice date doesn’t trigger tax: issuing an invoice is a billing event, not a sale completion; if you invoice before shipping, the tax obligation hasn’t arisen yet
- Payment date doesn’t trigger or delay tax: receiving payment after the ship date doesn’t move the sale to a later period; not receiving payment doesn’t excuse the tax obligation, you owe on the sale even if the customer never pays
- Net-30/60/90 B2B sales: if you ship March 31 on net-60 terms and the customer pays May 30, the sale belongs on the March return; the tax was due in April (March period)
- Pre-orders and backorders: tax accrues when the goods actually ship to the customer, not when the pre-order is placed or the pre-order payment is received
- Digital goods: for downloaded or streamed digital products, accrual typically occurs when the product is delivered or made available to the customer
- Service invoices: for taxable services, most states use the date the service is completed or the date the invoice is issued, whichever is earlier; consult state-specific guidance
- Practical implication: if your accounting system recognizes revenue on cash receipt, your sales tax reporting must use a different data source (order management system or shipping system) to capture the shipment date correctly
Frequently asked questions
Does sales tax accrue when I send the invoice or when I get paid?
Neither, in most cases. Sales tax accrues when the sale occurs, for shipped goods, that's when the goods ship and title transfers to the buyer. Invoicing before shipment doesn't trigger the tax obligation, and payment after shipment doesn't delay it. The tax belongs in the filing period covering the shipment date.
What if I invoice in one month but ship in the next?
Report the sale in the period when shipment occurs, not when the invoice is issued. If you invoice March 28 for goods that ship April 3, the sale belongs on the April return. The invoice date is a billing event; the shipment date is the taxable event.
Looking for more answers on this topic?
Browse Excise Tax, Timing & Special Cases