Re: Sales Tax Laws

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[quote="robertl"]Generally you only have to collect sales tax from a state(s) where you conduct business or have a nexus with a state. 

President Bush signed into law a two year moratorium that prevents state and local governments from imposing new taxes on Internet businesses. Which will be up in Dec next year.

Some states are trying to broaden what a nexus is with a State. Example, your website is hosted in New York State but your business is in Georgia, the state of New York says well a nexus exist so you must pay New York sales tax. Some States have argued that calling on customers in their state creates a nexus. 

Now most states have "use" taxes. Which means if I live in Colorado and order a new set of skis on the internet, mail order or by whatever means, out of state, by law at the end of tax year I have to pay Colorado sales tax on the skis. Most states do not enforce this, simply because they don't have the manpower. Some states are trying to get the Shipper(your business) to send information about the buyer to his or her state so they can insure that the proper sales tax is paid by the buyer, imagine if you had to do that for fifty states!

I wonder what is going to happen in Dec' 03, sales tax gone mad? Ah! Just in time for Christmas![/quote]

Not sure if you mentioned this or not, but states can only collect tax from you if you have a physical presence in that state, cause you are creating nexus in that state.  For example, and this is what my company has to do whenever there is a hosting change.  We have an office in NH,  (our HQ), we have a warehouse in OH, we have a retail outlet in VT, we are hosted in MD.  We charge tax to OH and VT residents.  Theres no sales tax in NH, we lease our equiptment from the hosting company in MD so we dont have a physical presence in MD.  If you are renting space on a server that doesn't count as a physical presence and therefore you are not creating nexus.

Please, please be very careful concering the issue of taxes, some states dont understand this and will fight you even if they are wrong, please consult a licensed tax attorney.