Sales tax

[Phil Steinmeyer]

What's the current situation re: U.S. sales tax on downloadables? Is there any requirement by any state to collect them?

What about for physical CDs - does the old standard apply that you only have to collect sales tax if seller has a physical location in same state as buyer?

In general, I'd like to err on the side of caution and doing things in accordance with the various state laws - looking for info - any good links to detailed explanations would be appreciated as well.

Also, I see that the major order processing services collect the European VAT. What about Canada, Australia, and so on - I imagine some orders come from those locations?

[FlySim]

I let my payment processor (eSellerate) worry about the tax mess.
I think they only charge tax on orders from their home state (Nebraska?) and
they charge VAT when needed.

[tentons]

Kind of related to this, Plimus has an option to do something or other with VAT. Should that be turned on? I don't really know what it means, except maybe I get less money for EU sales. Anybody have advice for how this option should be set?

[ErikH2000]

Kind of related to this, Plimus has an option to do something or other with VAT. Should that be turned on? I don't really know what it means, except maybe I get less money for EU sales. Anybody have advice for how this option should be set?
You should set this for your products that are download-only and unset for CD versions or other products that have something shipped out to the customer. My understanding is you want to do it this way simply because it allows Plimus to collect and pay VAT properly. I think you could make your products cheaper (VAT wouldn't be charged upfront) by unchecking the box for all your products (contracts), but then Plimus might get on your case at some point. I imagine a bad situation where Plimus presented you a bill for taxes it owed the EU. Or maybe it doesn't work that way. >>shrug<<

Also, you get the same amount of money from orders either way, but it's possible that more customers are scared off by having to pay VAT.

-Erik

[Martoon]

Technically, in the U.S., you're supposed to charge sales tax in any state that you've ever physically done business in. For example, when I worked at Nordic Software (http://www.nordicsoftware.com) where we self-published and did direct online sales, we had to charge sales tax for a handful of states because we had gone to trade shows in those states in the past, and had sold a few CD's at the shows.

[rioka]

AFAIK, I don't believe there is any sales tax on downloadables but you should check with your state's Dept. of Taxation web site just in case. From what it says for NY, for example, you're only responsible for tangible goods and goes on to list some examples.

Physical CDs - yes, you have to collect sales tax on them plus as Martoon says, you have to collect taxes too if you sell in another state and was physically there during the transaction. Going into that some more, you have to make sure you apply for a Cerificate of Authority for each state you will be selling in (a must for trade shows and conventions) which basically means you are legally allowed to sell in that state.

Anyways, I know it's not from where you are but here's the NY Sales Tax Manual (http://www.tax.state.ny.us/pdf/publications/sales/pub750_804.pdf) if it helps you get an idea of how this stuff works.

Hope that helps. :)

[tentons]

Hmm, I figured the payment processor would help you handle these things? Maybe I'm naive about that, though.

[rioka]

From what I understand, if you're doing online sales (downloadable or even CD sales), then yes, the payment processors will handle it including filing taxes but if you ever want to sell your games such as in conventions or whatnot, then you'll have to do all the grunt work yourself.