Business & Commercial Law
Do I Need to Charge Sales Tax for My Online Business?
As online retail continues to grow in popularity compared to physical stores, states want to make sure they are getting the sales tax revenue their laws call for.
Before 2018, an online seller would have to charge sales tax only if that seller had a physical location in the state where the online customer was located.
However, since the U.S. Supreme Court’s South Dakota v. Wayfair, Inc., decision, a vast majority of states have passed laws to collect sales tax revenue from remote sellers. That means if you live and have a physical business presence in New York and sell to someone in South Dakota, the state of South Dakota will want you to collect sales tax on those purchases.
However, many of these state laws have thresholds, such as doing at least $100,000 in sales to a state to have to collect.
Additionally, if you sell merchandise through a third-party vendor, such as Amazon, which has physical locations in most states now, you would likely need to collect sales tax from every transaction.