In May, 2013, the Senate passed the bill on Internet Sales Taxes. The bill is now in the House of Representatives for consideration. The major problem will be the counties and cities that have local sales tax since the bill will allow for cross-State charging of taxes. Currently, the states WITHOUT a sales tax include Arkansas, Arizona, Delaware, Hawaii, New Mexico, all of which do have a privilege tax which is a tax on the gross receipts of the vendor, and has no impact on the customer. Also, Oregon has no sales tax, but does have a local tax. All the other states (44),, have sales taxes, as do many of the localities in these states.

A state can not currently force you to collect sales tax unless you have nexus with that state. Nexus is defined as the minimum connection or link with a state that is required before a state can force you pay its taxes or collect taxes on its behalf. When it comes to sales tax you must still have some sort of physical link with the state in order to create nexus. However the states have really pushed the envelope on what constitutes physical presence. It is not just offices, plants or warehouses that can create nexus but rather activities performed by your employees or even third parties acting on your behalf.

Each state has different rules concerning nexus and those rules also differ based on the type of tax.

If you would like to discuss your situation in general please feel free to contact me or post some specific questions.

My associate Brian Dooley recently did some wonderful research and tax planning on this subject and was able structure the transactions off shore and greatly minimize the taxpayer's tax effect. You might want to read this link and contact Brian - www.gemms.us/us-taxation-and-foreign-trust