As more people start promoting and selling online audio and video products and written reports, states are getting wise to a new source of sales tax revenue. Popularly known as the “iTunes Tax”, the sales tax on digital download is far more over-reaching then just for music downloads.
If you sell ANY online product to a customer in one of these 18 (and have nexus there), you need to also collect and pay sales tax. If you don’t collect the sales tax, you’re still going to owe the tax. The online sales tax rules vary from state to state.
Here’s the current list of states to watch out for. They all have state sales tax on all digital downloads.
District of Columbia
The definition of nexus is expanding as well. If you have any part of the sales price in another state, you probably have nexus there as well. And that means state sales tax issues
Learn more about nexus and sales tax issues in my new book “Smart Business, Stupid Business” available January 2010.