I run a small online business myself, and had to tackle this same
question: do I have to charge sales tax, and if so, who do I have to
charge, and what do I have to charge it for?
The bottom line is this: You do not have to charge sales tax for
online sales to out-of-state customers.
If you are located in a state in the US, you probably DO have to
charge sales tax for customers in that state, depending on the item in
If you have more than one location in different states, you MAY have
to charge customers in each state in which you are located, although
this depends somewhat on the nature of your business oranization.
A good, up-to-date write-up on this topic can be seen here:
Sales Tax on the Internet: Who Pays It, Who Doesn't
and includes this summary of the situation:
"If an online retailer has a physical presence in a particular state,
such as business offices or a warehouse, it must collect sales tax
from customers in that state. If a business does not have a physical
presence in a state, it is not required to collect sales tax for sales
from customers in that state."
Another article on the topic can be seen here:
Navigating the Internet Sales Tax Laws
and pretty much reiterates the same message:
Q: Do I have to charge sales tax on orders placed on my Web site?...
A: Online companies with a physical presence, or nexus, in a state are
required to collect and report taxes on sales made to customers living
within that same state. For example, if your online business is based
in California, you must collect and report sales tax derived from
fellow Californians making purchases on your site...
Now...for sales to customers that do live in NJ, what are the rules...?
You can find a terrific overview of NJ sales tax rules in this
document from the New Jersey Division of Taxation:
New Jersey Sales Tax Guide
It tells you how much to charge, and what products to charge tax on.
Many food and drugstore items are exempt from sales tax, as are many
I trust this information fully answers your question. However, before
rating this answer, please let me know if you need any additional
information. Just post a Request for Clarification, and I'll be happy
to assist you further.
All the best with your business (and everything else) in the new year...
search strategy: Used bookmarked links to sales tax sites.
Request for Answer Clarification by
31 Dec 2004 10:33 PST
Thank you very much for your information.
In my case, our businesss has a physical presence in New Jersey only.
According to your information, I only have to worry about charging customers in NJ.
In my case, I am selling Oil Paintings, Tapestries, Leather Outerwear, and Jewelry.
Please clarify whether any of the above four product categories
require taxing in NJ.
The PDF you sent me does not include some of the above.
Clarification of Answer by
31 Dec 2004 11:32 PST
You are correct...you only need charge sales tax for your NJ
customers, and then, only on taxable items.
As noted in the NJ Division of Taxation document, most "tangible"
items are subject to 6% sales tax unless specifically exempted.
I read this to mean that Oil Paintings, Tapestries, and Jewelry would be taxable.
However, the jackets you are selling would seem to come under the
exemption for clothing items, and would not be taxable (the definition
of exempted clothing items on page 13 includes both inner and outer
If you want to hear this directly from the state authorities
themselves, you can contact the Customer Service office in the
Division of Taxation to confirm the status of your items:
Phone -- 609-292-6400
E-mail -- firstname.lastname@example.org
New Jersey Division of Taxation
Information and Publications Branch
PO Box 281
Trenton, NJ 08695-0281
Let me know if you need any additional information.