SALES TAXES for ONLINE SALES

[PPCUBAN]

Hello.

i have a website where i sell credit for text messaging. I have several packages... ex, 100 sms = $10... and so on.

my question is... this is an international service. Should i charge sales taxes? I have buyers from different countries.

I am confused about this. can anyone explain to me how this works?

thank you

[peteVA]

Where are you? That is the first thing that has to be covered.

[jkirby83]

good question for a CPA. In Texas you have to pay sales tax if you sell an item, but not a service. You'll need to check to see what your product is classified as and see if it is taxable to the locations in which you solicit.

[entrepreneurrebel]

I have not been in the product sales industry for a while. I know NY is trying to make all internet sales taxable (they are taxing Amazon) and IL is trying. Anyone else know if their state is trying to introduce sales tax on online purchases from resellers out of state?

FYI, any sales made in your state are taxable.

[peteVA]

FYI, any sales made in your state are taxable.

Not if you are in one of the 4 states that has no sales tax of any sort.

You cannot make any broad-brush statements about sales tax, every state is different and there are very few statements that apply to all.

New York is trying to get something going, including affiliate sales. If you live in NY and profit from a transaction, they want a slice of the pie.

Ohio tried but sort of gave up, because they wanted to tie the sale to a specific locality and the support for that detail in not readily available. Many tax districts do not neatly conform to Zip Code boundaries.

In some states, you can be in not only the state and local city taxing area, but in a "transportation district" and a "sewer district", etc. And the person across the street can be in one but not the other. If such taxes are levied small sellers will not be able to afford the resources to track each purchase to the local address / tax district level.

Basic rules that DO APPLY to all states with sales taxes -

If you deliver / ship something to someone in YOUR state, you must collect sales taxes. (If you do not collect, you are still liable.)

If you deliver / ship something to someone outside your state, you are NOT to collect sales taxes.

If someone outside your state orders something from you to be delivered into your state, you collect the tax.

If someone in your state orders something to be delivered outside your state, you do not not collect taxes.

The above are universal. But what is specifically taxed is not. In some states, clothing is, in others it is not. In some service and labor are taxed, in others not. In some if service, such as a service contract, includes parts replacement, it is taxable. And on and on. You need to check with your own state for the details.

But, if selling items that are taxable in your state, you are liable for sales taxes on everything you deliver within your state, no matter where the order originated. Conversely, if the delivery is out of your state, you are not liable.

This does not include wholesale sales to other registered sales tax account holders. Again, this varies by state, but if furnished with proof of a sales tax account you can sell without charging tax, as the liability is now passed on to the buyer. Keep records of these exempt sales and have proof on hand that they are exempt.