How Sales Tax Works on Cohart

 

What is Sales Tax?

Sales tax is a government-imposed tax on the sale of goods and services. In the U.S., it’s typically collected at the point of sale and varies by state, county, and city. Cohart is registered to manage sales tax in all U.S. states.

How is Sales Tax calculated on Cohart? 

Sales tax is calculated automatically during checkout, using the latest tax rates across U.S. jurisdictions.

• Online sales or custom invoice with Ship option: Sales tax is automatically applied based on the sales tax rate of the buyer’s state/city (once shipping address has been filled).
• Online sales with Pick up option: Sales tax is automatically applied based on the seller’s state/city (if applicable).
• In-person sales (via Quick Sell) or custom invoice with Invoice Only: Sales tax is calculated based on the location at the point of sale. When checking out, the seller can toggle on “sales tax” and input the local tax by entering the area’s zipcode for a calculation.

The sales tax amount is added on top of the artwork price or order subtotal, and is shown clearly to the buyer at checkout. The seller’s payout is based on the pre-tax price, and Cohart handles tax collection and remittance.

Sales outside of the US

Even if the seller is international, U.S. sales tax must still be collected for sales made in the U.S., depending on state requirements. Sales tax depends on where the sale takes place or where the artwork is delivered, not where the seller is based. If your sale takes place entirely outside of the U.S., U.S. sales tax does not apply.

To avoid applying U.S. sales tax for non-U.S. sales:

• Select “manage my own sales tax” during checkout, or
• Use ZIP code 00000 (for QR code or Buy Now checkout)

This ensures that U.S. sales tax is not added to the transaction.

How Do I (the Seller) Set the Sales Tax Rate for Ship Sales?

For online sales or custom invoice with Ship option, the seller does not need to set a sales tax rate. Our system automatically calculates the sales tax amount based on the buyer’s address and zip code once they have filled it in.

How Do I (the Seller) Set the Sales Tax Rate for Pick up Sales?

For online sales with Pick up option, the seller can set the sales tax rate based on their state/city by following these steps:

1. Navigate to the Edit Profile tab of your Dashboard.
2. Visit the Sales Tax section.
3. Enter the local zip code where you are selling from, to automatically calculate the Sales Tax rate (e.g. if you enter the LA zip code of 90230, the rate will show 10.25%).
4. Alternatively, you can manually input a different Sales Tax rate (e.g. 15%).

How Do I (the Seller) Set the Sales Tax Rate for In-Person sales?

If you are completing an in-person sale (via invoice), the Sales Tax is calculated based on the location at the point of sale. 

When creating an invoice for in-person sales, the seller can toggle on Sales Tax and input the local tax by entering the area’s zipcode for a calculation. 

If you want Cohart to manage sales tax for an in-person sale, make sure sales tax is enabled at checkout and the correct local ZIP code is entered. If you choose to manage sales tax yourself, Cohart will not remit sales tax for that transaction, and you will be responsible for filing and paying it directly.

1. Create an invoice or click on the Quick Sell button in App.
2. Toggle on Sales Tax.
3. If you have already set the default rate from your profile, it will be applied here.
4. You can add or adjust the rate for that specific invoice as necessary.

Managing Sales Tax Yourself 

Cohart gives sellers the option to manage their own sales tax, instead of having Cohart collect and remit sales tax on their behalf.

Opting Out of Cohart-Managed Sales Tax

When creating a sale or invoice, sellers will see the option:

“I don’t want Cohart to manage my sales tax.”

By selecting this option, you acknowledge that:

• You are choosing to handle sales tax collection and reporting yourself.

• Cohart will not refund sales tax if this option is selected.

 

Sales Tax and Payouts

Cohart can manage U.S. sales tax for eligible transactions processed through our platform.

For Cohart marketplace / Buy Now sales, Cohart manages sales tax automatically. Cohart collects and remits the applicable sales tax on your behalf, and the seller receives the artwork price excluding sales tax.

For POS, Tap-to-Pay, Quick Sell, or invoice sales, sellers can choose whether Cohart manages sales tax or whether they manage it themselves.

If you would like Cohart to manage sales tax, keep the sales tax management option enabled during checkout. Cohart will collect and remit the applicable sales tax on your behalf.

If you choose to manage sales tax yourself, the full payment, including any sales tax collected, will be paid into your connected account. You are then responsible for filing and remitting that sales tax to the appropriate tax authority.

Sales tax is separate from your Cohart processing fees and is not deducted from your payout when Cohart is managing sales tax.

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Frequently Asked Questions

Who handles sales tax on Cohart?

It depends on the type of sale. For Cohart marketplace / Buy Now sales, Cohart manages sales tax automatically. Cohart collects and remits the applicable sales tax on your behalf.

For POS, Tap-to-Pay, Quick Sell, or invoice sales, sellers can choose whether Cohart manages sales tax or whether they manage it themselves.

If Cohart manages sales tax, the buyer pays sales tax at checkout, Cohart remits it, and the seller receives the artwork price excluding sales tax.

If you choose to manage sales tax yourself, the full payment, including any sales tax collected, is paid into your connected account. You are responsible for filing and remitting sales tax yourself.

What about local or in-person sales?

If you're selling in person and using Cohart Tap to Pay, Cohart is still processing the payment, so we handle the tax for you.

However, if you are accepting direct payments outside of Cohart (e.g., cash, Venmo, personal card readers), then you are responsible for collecting and remitting any applicable sales tax to your local or state tax authority. Here's a list of available payment methods at Cohart.

For example, in California, in-person sales may require the seller to register with the CDTFA and remit the appropriate sales tax based on location.

Do I Need a Seller’s Permit?

If you process sales through Cohart:

• You do not need a separate seller’s permit for those transactions
• Cohart collects and files sales tax on your behalf

If you accept payments outside of Cohart (cash, Venmo, other processors):

• You may need a temporary seller’s permit
• You are responsible for reporting and remitting sales tax

Each fair may have specific requirements — check your exhibitor materials if unsure.

Does Cohart provide tax documentation?

You don’t need to send separate invoices to buyers for transactions processed through Cohart. If you need documentation for your records (e.g. for VAT or income tax reporting), you can download your transaction history or generate an invoice addressed to Cohart.

We recommend consulting a tax advisor for reporting obligations based on your country and business setup.

What if I don’t set the sales tax rate in my Profile for online Pick up sales?

If you don’t set a Sales Tax rate in your Profile for Online Pick-up sales, the rate will then be calculated based on the buyer’s location. At checkout, the buyer can enter their zipcode, or the zipcode of the location at the point of sale. The system automatically identifies the zipcode and the correct sales tax rate, and adds tax calculation to the order summary. 

What’s the difference between sales tax and income tax?

Sales tax and income tax are different. Here’s a simple breakdown of some common tax situations:

• Sales tax: Paid by the buyer at checkout and calculated on the purchase price of the artwork. For sales processed through Cohart, Cohart collects and remits this tax, where applicable. 
  
• Income tax: Based on your earnings from sales and handled separately. Cohart manages sales tax for eligible transactions, but you remain responsible for your own income tax reporting. When you sell art, that amount is considered personal income. Cohart issues a 1099 annually for sellers so they can report that income on their own tax return.
  
• Customs duties / import taxes: These may apply when artwork is shipped across international borders. They are separate from sales and income tax and are typically assessed by customs authorities based on the destination country.
  
• VAT (Value Added Tax): A tax used in many countries outside the U.S., applied at different stages of a sale. VAT is not the same as U.S. sales tax. Cohart currently manages U.S. sales tax only; VAT obligations depend on the country and the structure of the sale.

What if I'm exempt from sales tax?

Regardless of a seller's tax status, we collect sales tax based on the buyer's location and handle the remittance. Sellers remain responsible for their individual income tax obligations at the end of the fiscal year.

Does Cohart provide support with taxes?

Sellers are responsible for their individual income tax obligations in their respective countries. Since tax laws vary, we cannot provide personal tax advice. Since sales are processed directly through Cohart's platform, you don’t need to create an additional invoice for the buyer. However, if you do need any additional documentation for your own tax purposes or for your own records, you’re welcome to generate an invoice addressed to Cohart if that helps with any reporting on your side.

Should sellers consult a tax advisor?

Yes. While Cohart can manage U.S. sales tax on platform transactions, every seller’s broader tax situation is different. We always recommend speaking with a qualified tax advisor for personalized guidance.

I received a sales tax notice or late fee — doesn’t Cohart handle this?

Cohart handles sales tax collection and filing for transactions processed through our platform. These sales are filed under Cohart, not under your individual business.

This means:

• The sale is recorded under Cohart
• Cohart collects and files the applicable sales tax on your behalf
• You do not need to file sales tax separately for those specific transactions

However, if you have an active sales tax account registered under your own business (for example, with a U.S. state like Florida), the state may still expect you to file returns — even if you had no direct sales.

In these cases, you may need to:

• Submit a “zero return” (reporting no sales), or
• Close your sales tax account if it’s no longer needed

If you receive a notice or late fee, it is typically related to this separate filing requirement — not the sales processed through Cohart.

If you’re unsure, feel free to reach out and we’re happy to help clarify your specific case.