PrintIf your corporation sells tangible goods to the general public and your corporation is incorporated in a state that imposes a sales tax on those goods, your business will likely be responsible for collecting and paying that sales tax. The amount of the sales tax is computed based on the sale price of the tangible good. The percentage of the sales tax varies from city to city; county to county; and from state to state. Some states impose no sales tax whatsoever.
With regard to sales of tangible goods to the general public by your corporation, you will be responsible for the following:
- Making certain the sales tax is properly charged and collected from the customer;
- Making certain the tax amount is reported in a timely manner to the correct state or locality;
- Ensuring the tax is paid in a timely manner to the correct state or locality; and
- Obtaining sales permits as necessary.
Internet Sales Transactions
In 1998, Congress delayed making a decision regarding enacting a uniform tax code for the Internet by passing the Internet Tax Freedom Act (ITFA). This act afforded a three-year moratorium on the collection of taxes over the Internet. In 2001, a two-year extension of the act was signed. The extension has since expired and the uniform tax code has yet to be enacted.
Some states, including Connecticut, Maine, Nebraska, New Jersey, and North Carolina have attempted to enact rules for collecting sales tax for online sales.
Whether a sales tax is owed is determined by the location of the buyer, not the seller. If you live in a state that collects sales tax, you are technically required to pay a sales tax to your state. In this instance the sales tax is considered a use tax. This situation is very difficult to enforce.
If an online company has a physical presence, or nexus, in a state, that company is required to collect and report taxes on sales made to customers living within that state. In other words, companies that sell products over the Internet are subject to the sales tax laws in the states where the company has a physical presence. You should determine whether your state has enacted rules for collecting sales tax for online sales. A good place to start looking is by going to your state's Secretary of State Web site. And be sure to read What Online Sales Are Subject to Sales Tax?
