On line sales of goods to the customer on the Internet is liable to internet sales tax in US, when the seller has a physical presence in the concerned state of the buyer. On line retailers in internet commerce are not obliged to collect sales tax for sales into those states where they do not have any physical presence or outlet.
In 1992 the Supreme Court had held that mail order merchants need not collect sales tax for sales into states where do not have any physical presence. The same principle is applied to the issue of sales tax on Internet sales.
The Internet Tax Freedom Act of 1998 prohibits federal, state and local governments from taxing Internet access and from levying discriminatory Internet only taxes such as bandwidth taxes, e-mail taxes, Internet taxes etc. There is popular misconception that the said Act exempts sales on the Internet from sales taxes. However, the position is that Internet sales will suffer the same rate of sales tax as non-Internet sales through mail order business, when the seller has a physical presence or outlet in the state of the on line purchaser.
Read: http://www.gseis.ucla.edu/iclp/itfa.htm
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