Sales Tax

Transactions done on the Internet are being taxed in three areas: Internet access charge, sale of goods, and software-information purchased by download.

• Acces charges.
  Access charges are what Internet users pay their Internet service providers for basic access to the Internet. These fees can be subject to sales and use tax in some states, and to telecommunications taxes in others.

• Sales of goods.
  Sales of goods over the Internet involves orders being placed over the Internet with the physical goods delivered through traditional delivery channels, such as US Mail, and overnight carriers.

• Software-Information.
  The taxation of software or information that is purchased and then downloaded from the Internet has been determined by a jurisdiction's (state, town or city) stance on tangible vs. intanglible goods.

At the present time, some states do not tax those items that it considers intangible, while on the contrary other states will only consider physicall goods as tangible. In these cases, software is considered intangible, and would be considered tax exempt. However, other states have expanded the definition of what are considered tangible goods to include software, and would consider a download a tangible good and therefore taxable.[Mclure,Jr.,1997]

Useful links of information about Sales Tax on the Internet

Back to Taxation

References