E-Commerce and Taxation
Many of our clients are entrepreneurial and some of these have online businesses. So taxation in the online space is always a hot topic. For US domestic persons, the question is somewhat simpler at the Federal level but becomes complex at the State level. For foreign persons selling goods to US consumers however, it can be complex at both the Federal and at the State level.
Let’s talk about the States first. At the moment, sales tax rates vary widely and range from less than 1% to over 10%. There are myriad exemptions and exceptions and rates vary across types of goods and services as well as cities and even counties. Clothing and footwear under $110 is tax free in New York City, for example. But buy something worth more than $110 in Manhattan and the item is subject to a 4.5% city sales tax and a 4% state sales tax. Sales taxes are collected in 45 states, the District of Columbia and Guam. Five states, including Alaska and Montana, do not collect sales taxes. Ok so you get…
Let’s talk about the States first. At the moment, sales tax rates vary widely and range from less than 1% to over 10%. There are myriad exemptions and exceptions and rates vary across types of goods and services as well as cities and even counties. Clothing and footwear under $110 is tax free in New York City, for example. But buy something worth more than $110 in Manhattan and the item is subject to a 4.5% city sales tax and a 4% state sales tax. Sales taxes are collected in 45 states, the District of Columbia and Guam. Five states, including Alaska and Montana, do not collect sales taxes. Ok so you get…
