You are expected to know the law and collect the appropriate sales tax on internet sales.
Sales tax on internet sales are bound by ever changing local, state and federal law. Calculating the proper internet sales tax to charge customers is based on many factors including the billing address (for non shippable products) and the shipping address for shippable products. These addresses determine the local and state tax jurisdictions to use. Sales tax jurisdictions overlap, overrule and override one another. There are over 11,000 sales tax jurisdictions in the United States. Tax jurisdictions may vary from one building to the next.
To complicate things more, sales tax rates and sales tax jurisdictions are constantly changing. There were over 5,000 changes last year alone. That’s about 100 sales tax related changes per week. If you are involved with internet transactions you are accountable for these potential changes in the sales tax on internet sales.
Sales tax on internet sales such as online stores, event registrations, subscriptions, memberships, B2B and B2C transactions of any type are subject to sales tax. If your customers happen to be tax exempt, there’s even more sales tracking and paperwork, a lot more. This adds collecting, organizing and accessing sales tax exemption certificates for sales tax exempt customers and associating the most current certificate with each sales tax exempt customer order.
Sales tax on internet sales extent beyond the United States. You are also expected to know the law and collect the appropriate sales tax on internet sales outside the United States (European VAT tax comes to mind).
Sales and use tax compliance, especially for sales tax on internet sales, should be automated. Beyond automating sales tax on internet sales at a global scale, it is wise to also automate the reporting.
The SharePoint Cart E-Commerce Module offers global level calculations of sales tax on internet sales for both B2B and B2C transactions, as well as the very important automated reporting.