Do I have to charge sales tax if I sell items online to clients in the USA from Israel?

Question

I have a bank account in Israel and I am a dual citizen in the USA and Israel.

The product is in the US already and shipped by the distributor in New York. I am just the middleman.

Answer 1

The short answer is No.

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Since 1992, a still valid Supreme Court decision ruled that companies do not have to pay sales taxes in states where they do not have a physical presence.

Congress has yet to rule that the states can collect such taxes. Internet services cannot, at this time, be taxed by the states under Federal law.

Answer 2

The following is similar to a response I made to another question. The response applies to all interstate sales whether catalog or internet based.

Sales taxes are transactional taxes. Whether a sales tax is due is determined at the time and place of the sale. In interstate sales, where the product is delivered across state lines, it is the state of delivery whose tax laws apply. The sale is deemed to occur where delivery is made. In interstate sales, where you order the product from is irrelevant. Billing address is also irrelevant. It is place of delivery that controls.

If you are sitting in New Hampshire and place an internet order for delivery to Aunt Bessie in California, California's tax laws apply. If you are in Texas and order something from a California catalog business to be shipped to your kid in college in Colorado using your credit card with a Ohio mailing address, Colorado tax law applies.

If the seller has what is called "nexus" in the delivery state and that state levies a sales tax, the seller is required to charge and collect the tax. If the seller does not have nexus, then they have no legal obligation to charge the tax.

Nexus generally is having a physical presence in a state such as having an office or a warehouse or an agent in the state. If your business has employees selling in a state or doing installation or maintenance, you probably have nexus in that state. Nexus is not always obvious. You need to look at what you have where. “What” includes employees, assets and people or businesses that are considered your agent.

If you do not have the requisite nexus in a state you ship into, no you do not have to charge and collect that state’s sales tax. In interstate sales do NOT charge and try to collect your home state’s sales tax because it is not legally due. As noted above it is the state of delivery that controls.

That all being said I warn you about the drop shipment rules. They are too long and too complicated to go into here but you will encounter situations where your distributor will be required by the delivery state's law to charge YOU sales tax. If you can not give the distributor the delivery state's resale certificate YOU (and not your customer) may be charged tax. Not all states follow that but many due.

You better learn about sales tax and resale certificates. Start with New York. Research “drop shipments”.

Answer 3

Yeah, I hear you about the dual citizenship, I think that's great. As far as the taxes you are asking about, this would only (politically correct) be needed if the person is located in the same State that you are, but that's if you have a large business retail related and if you have a seller's permit, of course this would need to be reported, if you don't have it, then there's not a whole lot to worry about. Sooner or later though you'll have to end up reporting only from customers residing in your state.

If you've ever purchased something from ebay in your state and the seller was also located in that state, you were charged tax. So make sure what state is the buyer located in. And most people know this.

Answer 4

"So if i'm not registered yet, am I nevertheless answerable for the sales to instate purchasers " definite. From day one million. there is an expression; "lack of awareness isn't any excuse". You, as a business enterprise proprietor, are responsile for locating out what you're able to do to conform with all state and federal regulations, rules, tax standards, and so on. earlier you habit business enterprise. Sorry, yet that's the techniques-set of the government.

Answer 5

No you do not have to charge sales tax. The customs will charge duty on the goods when they come into the States. In any case it's up to the recipient to file and pay use tax. If you charged sales tax, who would you remit it to?

Answer 6

No if you are residing in Israel.
Yes if you selling the item to the buyer who resides in the same state as you are in (if you are in US)