Understanding Sales Tax for E-Commerce

By Kamal J. Haddad December 21, 2016

Whether you are considering selling products online or are already doing so, the next important question is, “What about sales tax?” As you may know, there are websites that allow you to make a purchase online from an out-of-state seller without paying sales tax. That will not last very long as the new Amazon sales tax laws go into effect across the United States, and as states realize how much sales tax revenue they lose each year. This is making it profitable and worthwhile for states to audit companies that sell products online. There is a lot of confusion when it comes to sales tax and selling online. In this article, I will attempt to demystify and simplify a rather complex problem. I will try to explain the difference between sales tax and use tax as well as your responsibility for reporting and properly collecting sales tax from online transactions and potential new problems you create due to what states call nexus.