US Tax Regulations

The United States remains the only OECD member country without VAT (Value Added Tax), however sales taxes in the United States exist but operate at the sub-federal level.

Not every state and locality has a sales tax. Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon do not have a sales tax. In addition, most states have tax exemptions on certain items, such as food or clothing. If you are charging sales tax, you need be familiar with applicable rates.

You should always seek professional legal & or taxation advice for information that applies to your particular e-business.......

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Importance Of Understanding US Tax Laws & Obligations

Filing and paying your federal taxes correctly and on time is an important part of living and working in the United States. Understanding the way taxes work and the role of the Internal Revenue Service (IRS) can make it easier to get - and stay - out of tax trouble.

You should always seek professional legal & or taxation advice for information that applies to your particular e-business.......

Internet Sales & Tax

• If your business has a physical presence in a state, such as a store, office or warehouse, you must collect applicable state and local sales tax from your customers. In legal terms, this physical presence is known as a "nexus" (each state defines nexus differently, but all agree that if you have store or office of some sort, a nexus exists).

• If you are uncertain, whether or not your business qualifies as a physical presence, contact your state's revenue agency:
  Website / Link: http://www.business.gov/guides/taxes/state.html.

• If you do not have a physical presence in a state, you are not required to collect sales taxes from customers in that state (see #1).

You should always seek professional legal & or taxation advice for information that applies to your particular e-business.......

Purchasing from overseas suppliers

Supplying customers outside USA

Shipping your product overseas presents more challenges than selling locally as it requires businesses to have an understanding of taxes, duties, customs laws, and consumer protection issues involved with international commerce, and because these rules and obligations vary from country to country, this can be very complex.

An online merchant selling to international customers must pay careful attention to the tax implications of those sales.

• In general, once a company crosses a certain threshold of activity in a foreign country, the company becomes subject to income tax in that foreign country. In many cases, a company must have a "permanent establishment" (such as a shop, office, warehouse or personnel) in the foreign country before that country will subject the company to income tax on the company's business profits from that country.

• However, there are important exceptions to this general rule. Some payments from customers in a foreign country may be subject to withholding tax by the foreign country (e.g., if the foreign country determines that the payments are "royalties" or other payments subject to withholding).

• In addition, a foreign country may impose other types of taxes, such as value-added tax (VAT), on sales into its jurisdiction.

You should always seek professional legal & or taxation advice for information that applies to your particular e-business.......

Digital Products & Tax

Digital Goods - Consumption Outside USA

• Electronically delivered goods should be treated like any other sale to a foreign customer.

• Rules and obligations can vary from country to country and online merchants and businesses need to be aware of laws and regulations to aviod costly mistakes.

• Tax and tariff information on a country-by-country basis is available, or contact a Commercial Specialist in the targeted country for more information.

• In addition, a foreign country may impose other types of taxes, such as value-added tax (VAT), on sales into its jurisdiction. For example, as of July 1, 2003, the EU ("European Union") member states began taxing sales of electronically supplied products and services by non-EU firms to non-business customers located in the EU.

• Non-EU providers of electronically supplied products and services are now required to register with a tax authority in a member state and collect and remit VAT based on the VAT rate of the member state where their customer is located.

• More information on online taxation can be found at:
  Department of Commerce, Office of Information Technology and Electronic website
  Website / Link: http://www.export.gov/infotech/

 
You should always seek professional legal & or taxation advice for information that applies to your particular e-business.......

Subsequent re-sale of Digital Goods

Free Guides & Tools....

• Taxes – What You Need to Know – Responsibilities & Benefits!
  Website / Link: http://www.irs.gov/advocate/article/0,,id=180214,00.html
  This tool kit is an easy-to-read toolkit designed to help people understand taxes.

• Collecting Sales Tax Over the Internet
  Website / Link: http://www.business.gov/business-law/online-business/sales-tax/
  Information for online retailers on the rules and regulations for collecting sales taxes from your customers.

Useful US Tax Links...

• Internal Revenue Service
  Website / Link: http://www.irs.gov/

• Internal Revenue Service - Tax Information For Businesses
  Website / Link: http://www.irs.gov/businesses/index.html

• Internal Revenue Service - Tax Code, Regulations and Official Guidance
  Website / Link: http://www.irs.gov/taxpros/article/0,,id=98137,00.html
  The place to start for researching publicly accessible versions of the Internal Revenue Code, Treasury (Tax) Regulations, or other forms of official IRS tax guidance.

• Tax and tariff information on a country-by-country basis.
  Website / Link: http://www.ita.doc.gov/td/tic/tariff/index.html

• Business.gov
  Website / Link: http://www.business.gov/
  (US) Federal government's one-and-only portal focused on helping businesses find government programs and comply with Federal regulations.
• Department of Commerce, Office of Information Technology and Electronic website:
  Website / Link:  http://www.export.gov/infotech/
• Contact your state's revenue agency:
  Website / Link: http://www.business.gov/guides/taxes/state.html.

Specific Tax Queries / help.....

• Taxpayer Advocate Services:
  Website / Link: http://www.irs.gov/advocate/index.html
  If you are experiencing economic harm or seeking help in resolving tax problems that have not been resolved through normal channels, you may be eligible for Taxpayer Advocate Service assistance. This page has links to a range of services available.