Collecting sales tax on internet sales - outside CA?

[lespaul]

Hi everyone, I've researched the issue of collecting sales tax outside CA and and I get conflicting answer.

Question is: Do I need to collect sales tax on sales made outside California?

I know it depends on many factors, so here is my situation:

- I DONT have a brick and mortar building
- Sales are for physical products, not services
- I DONT make over $1M in annual sales.
- Im in CA - Los Angeles county

If I do collect sales tax, I assume I charge the CA rate -not the rate the order is coming from.

Any input would be great -thanks!

[Freelancier]

It's something you'll need to take up with California's Department of Revenue - sales tax division (or whatever it's called).

In general, if you don't have a physical presence in the state where your buyer is located, then you aren't obligated to collect sales tax on the transaction (the buyer might be obligated to pay sales tax, but that's none of your business), since it falls under Federal law (interstate commerce) and not state law. But states are trying to force a change by writing laws to require you to collect tax for transactions where the buyer is in their state and you are not. So we're heading for either a court case or a law created by Congress.

[jamesray50]

Hi Lespaul - Welcome to our forum. I agree with what Freelancier said. Since you are located in CA, you will have to add sales tax to your orders and remit it to the revenue department (or whatever it's called). I wouldn't even worry about collecting sales tax on out of state orders, with the exception of one thing. If you are shipping your orders from another state and you have orders in the state you ship from, then you would be required to charge sales tax and pay it to that state. This is what is called Nexus. A presence in any state would require sales tax collected and submitted to that state for orders in that state. If this is a possibility for you, the % would be whatever that state is. And some states also have local taxes, and the local tax % varies by locality.

Sales tax is a very complicated issue. In some states the burdon of paying sales tax is on the end user. In other states the person that originally bought the product is responsible.

Hope this helps and good luck!

[billbenson]

I have a similar issue that just came up this week. I'm in Florida. The product drop ships from Wisconsin. Customer ship to address is in CA. I only charge sales tax if it is shipping to FL. For this RFQ the customer wanted me to add 12.5% sales tax for California. I would have no idea as to how to fill out the paperwork for the CA taxes and in spite of the fact its a large order, I don't feel like messing with the CA tax paperwork.

Similar circumstance. I had an order from IL a few months ago. The purchasing agent contacted me to add local sales tax to the order. I said we don't do that and she replied "ok we can do that on our end". It's the same analogy as CA though.

I can only see the state taxes for internet sales becoming a greater nightmare. Having said that, at this point in time, I don't see myself being responsible for charging local out of my state taxes?