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Impact of sales taxes

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Category : > Article Directory of Sales Tax Registration
Posted On : Thu Dec 31st,2009

A sales tax or a retail sale is a tax on the end-purchase of a good and provision of services including internet sales. Normally sales tax is levied on 'tangible personal property'; it has to be movable. Intangible property (eg stocks and bonds) are excluded.

Sales taxes can be applied to tangible goods like food (in some states), clothing, cars, furniture, household items, and other goods. By comparison, the sales tax does not generally apply to landscaping services, attorney fees, private school tuition, stocks and bonds, real estate investments, and other purchases more typically made by higher-income families.

A seller has to charge sales tax if it has 'nexus' where it is located. Nexus, or physical presence, is established if a business maintains a temporary or permanent presence of people (employees, service people or independent sales/service agents) or property (inventory, offices, warehouses) in a given locality. There is no over-arching definition of nexus, so each taxing locality may define it differently - and many do, leading to endless problems for businesses which have operations in multiple states.

All the products are subject to sales tax, and states offer different exemptions for this. Food, clothing, pharmaceutical products, purchases for agricultural are commonly excluded. The rates of sales tax may also vary within a state for different types of business.  


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Comments (1)
Harry Mitt   wrote on : Wed May 05th,2010
Is it legal not to charge sales tax if you own an eBay store? I just recently opened a seller store on eBay. Ebay says something like, "If you want to charge sales tax enter the percentage here" and then you click to enable it. I live in California and was just wondering if you have to charge tax selling on eBay (especially if you're paying for a seller store)? Are they somehow exempt?      View Detail
Reply :

Either you or ebay must charge sales tax to the customer. It depends on the contract between the parties. But it must be charged by either party. To charge sales tax you must have sales tax permit.

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