Myths and realities of taxes for online businesses

[mandy]

Myth #1: Sales tax depends only on the location of the buyer.

Reality: Sales tax collection is based on whether a seller has a physical presence within a state. Usually, this means having an office, store, factory or other facility. But physical presence can also result when a business sends a sales force into a state or otherwise has a "nexus" or contact with that state.

Once a business determines which state or states it has a physical presence in, then it must collect sales tax for sales to customers within each state.

However, five states -- Alaska, Delaware, Montana, New Hampshire, and Oregon --do not have sales tax. And even when a business is subject to sales tax collection rules, many items may be exempt from tax. For example, there may be no sales tax on clothing in a particular location. You need to check with the state tax or revenue department to find out what is or is not exempted.

full article: http://www.inc.com/resources/tax/article...ltman.html