Collection of sales tax on internet sales has been a matter of ongoing debate both within individual states and at the federal level.
The current default rule throughout the United States is that you must collect sales tax on internet sales from customers in those states where your business has a physical presence. Generally speaking, a physical presence means having:
- a warehouse in the state
- a store in the state
- an office in the state, or
- a sales representative in the state.
Typically, if you do not have a physical presence in the state, you are not required to collect sales tax for an internet-based sale to someone in that state. However, many states have used the term “Nexus” rather than “Physical Presence” in their sales tax laws, regulations or other official documents. In the process, these states have sometimes defined nexus in ways that could go beyond physical presence.
For that reason, it’s important for online sellers to be aware of the internet sales tax laws in each of the states where their customers are located. Learn the current rules for all 50 states with this handy guide, provided by legal advisory company Nolo: Internet Sales Tax: A 50-State Guide to State Laws.