In most cases, you will pay taxes on Internet sales when a product is shipped into the same state where you live. There are exceptions where a seller may have an agreement with certain states to collect sales taxes, or if they are physically in one state but shipping from another. In other words, if you live in New York, the seller is in Georgia but ships out of New York, you will have to pay taxes on Internet sales. Of course, there are a few states such as Texas that don’t care if the product is shipped from another state, the buyer is still liable for sales tax.
As a seller, you must make sure you are aware of the tax laws in each state where you ship in order to know when to pay taxes on Internet sales. No two states have the same laws, so you have to make sure that you know what you can do legally, and whether each situation requires a different application of the law.
The best way to know if you have to pay taxes on internet sales is to have an accountant who can advice you which states require a seller to collect taxes on Internet sales. Unless you have lived or worked in every state where you may ship, you cannot keep up with the laws pertaining to taxes on Internet sales, but you pay an accountant to do just that.
Of course, if you don’t have an accountant, you can also contact each of the states where you ship to obtain information concerning the collection of sales taxes on Internet sales. Tax laws are very complex, and some states become more complex and details than others, so it’s important to know how the tax laws are interpreted in each of those states and where there may be circumstances that warrant different treatment.
In order to maintain a good business relationship with your customers, you must be knowledgeable when to charge taxes and when to sell at face value. Taxes are never simple matters, which is what you should always have an accountant on hand to handle anything that pertains to taxes and to advice you regarding the collection of sales taxes.
Another option is to invest in tax programs such as Vertex and others that will calculate the taxes on Internet sales for you when necessary. That leaves you free to pursue things other than tax laws, and when the laws change, you simply update the program. It is definitely a much better choice than trying to figure things out by hand or reading publications that may have already become outdated.