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Charge tax for selling my own applications? 2
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Contact your state's Secretary of State (or the taxing authority, or your accountant), they can tell you.
The answers are typically yes for inside your state, and no for outside your state. But there are so many exceptions to these "rules" that you need some professional help.
Chip H.
____________________________________________________________________
If you want to get the best response to a question, please read FAQ222-2244 first
The answers are typically yes for inside your state, and no for outside your state. But there are so many exceptions to these "rules" that you need some professional help.
Chip H.
____________________________________________________________________
If you want to get the best response to a question, please read FAQ222-2244 first
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Weather or not you charge sales tax depends on if you have nexus in that state. Nexus is a term that is roughly translated as "business presence". My business is in Alabama and anything I sell in Alabama (unless it is to be resold or is sold to a tax exempt organization) needs to have sales tax put on the invoice.
I sell the same product to Indiana, where I also have an office, and it is also taxable.
I sell the same item to a customer in Oregon, where I not only don't have a business presence in Oregon, I have never even been there, and the item is not taxable on your invoice.
NOTE: The Oregon Sale IS TAXABLE, its just that you do not have to charge sales tax on your invoice. In this case, it is the duty of the buyer to self report and self pay the Use taxes. This is why you may have heard the term "Sales and Use Tax".
Also, you do not in the strict sense "pay" for sales taxes. You collect them as an agent for the states that you have nexus in, then remit those collections to the state on a timely basis. If you run into financial problems and eventually a bankruptcy hearing, these liabilities take precedence over most others, as the courts have ruled that if you did not remit these taxes to the state(s), then you have a breach of fiduciary responsibility (which you assumed when you got a seller's license for that state) and you can be held personally liable for these taxes, whereas you can go bankrupt on a lot of other stuff.
Sorry for the long post, but in a previous life I used to be an accountant and this is one area I knew a lot about and still do. If you have any questions, let me know.
Software Sales, Training, Implementation and Support for Macola, eSynergy, and Crystal Reports
I sell the same product to Indiana, where I also have an office, and it is also taxable.
I sell the same item to a customer in Oregon, where I not only don't have a business presence in Oregon, I have never even been there, and the item is not taxable on your invoice.
NOTE: The Oregon Sale IS TAXABLE, its just that you do not have to charge sales tax on your invoice. In this case, it is the duty of the buyer to self report and self pay the Use taxes. This is why you may have heard the term "Sales and Use Tax".
Also, you do not in the strict sense "pay" for sales taxes. You collect them as an agent for the states that you have nexus in, then remit those collections to the state on a timely basis. If you run into financial problems and eventually a bankruptcy hearing, these liabilities take precedence over most others, as the courts have ruled that if you did not remit these taxes to the state(s), then you have a breach of fiduciary responsibility (which you assumed when you got a seller's license for that state) and you can be held personally liable for these taxes, whereas you can go bankrupt on a lot of other stuff.
Sorry for the long post, but in a previous life I used to be an accountant and this is one area I knew a lot about and still do. If you have any questions, let me know.
Software Sales, Training, Implementation and Support for Macola, eSynergy, and Crystal Reports
You aren't the one paying the tax, you're just collecting it from your in-state customers on behalf of your state, county and/or city tax collectors. (gotta love how they make you do their work for them). Tax payments are usually made quarterly, but could be different in your area. Ask your accountant for the details.
Chip H.
____________________________________________________________________
If you want to get the best response to a question, please read FAQ222-2244 first
Chiph is right in the mark. In addition, some (many??) states have special assessment districts that arte collected as part of State sales tax. In California, the application of sales tax can be complex as applicability of special district tax is determined by the geographical destination if the product is transported via firms that are engaged in the business of cartage, or it is determined by location of seller, if an employee or owner delivers it! CA. has fifty-three special districts; sometimes more than one apply!
An accountant that knows the tax laws of your state is a valuable asset; keeping the books on sales tax clean is a must. Otherwise, you’ll surely hear; “Ding! You didn’t cross a “t” or dot an “i”, that’ll be [fifty_dollars|one_hundred_dollars|many_hundred_dollars] RIGHT NOW.
Steve
An accountant that knows the tax laws of your state is a valuable asset; keeping the books on sales tax clean is a must. Otherwise, you’ll surely hear; “Ding! You didn’t cross a “t” or dot an “i”, that’ll be [fifty_dollars|one_hundred_dollars|many_hundred_dollars] RIGHT NOW.
Steve
Contact your local Taxing Authority for sales tax. They get these kinds of questions all the time and are a good source for information. In the my situation, I have to fill out quarterly sales tax reports and remit any sales tax collected. If I collected no sales tax in the quarter, since I am registered, I still need to fill out and send the form. Failure to submit a report on time is a $50 fine. If your dealing with sales tax, you need to know the rules.
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