Online sales tax rules

[Girl_Racer]

Hi

Could somebody please explain what the current rules are surrounding the online sales tax.
My website is based in California.
Do I only charge state tax to CA residents? (not county/city, etc)?
and do I not charge anything to anybody else?

Help!

Thanks :-)

[wackal]

for state sales tax, yes, you only charge sales tax to CA residents. Not sure about city or county.

[pleeker]

I believe the current law is that you must charge state sales tax to customers who live in your "home" state, and every state in which you have a physical presence. So if you are HQ'd in California, and also have a store in Arizona, you'd charge sales tax to residents of both states.

[mquarles]

The term is "substantial presence." This could be a contracted sales person or a manufacturer who drop ships for you, a remote customer service rep, or other things. If you have a substantial presence in a state you must charge sales tax there.

MQ

[rcjordan]

[boe.ca.gov...]

[dannyboy]

I wonder if the same tax rules apply if you're not offering physical products, such as a membership service to a monthly marketing newsletter?

[rcjordan]

>physical

Usually, that's classed as an intangible and not taxed, but it varies state by state. BUT, it gets tricky even then. For instance, I sell a subscription to a report. If I deliver it by email, it's intangible --no tax. If I print it out or burn it do a CD, it's taxable. (I had my attorney get a letter ruling from the state on that one.)

[mquarles]

http://www.boe.ca.gov/sutax/outofstate.htm

From what I understand, there are still substantial questions about whether or not this is going to be deemed unconstitutional (I presume under the Commerce clause).

MQ

[wackal]

its a voluntary program so its definitely not unconstitutional. when you ship to someone who lives out of state, you're not required to collect sales tax, but the consumer is supposed to report the purchase and pay a use tax, which is generally the same as the sales tax. most people don't do this, so the state of CA is trying to encourage businesses to collect the use tax for them.