Frequently Asked Questions

Product Taxability

The taxability of products and services is enumerated within the laws of each state. There are publications for purchase that summarize the states’ tax laws available through various vendors, but they could have implicit interpretations of the law.

States also have department of revenue websites that provide access to the laws and regulations in their state.

No. The Internet Tax Freedom Act prohibited new taxes on Internet access fees and discrimination of electronic commerce. Most states do not tax Internet access fees.

The Act did not prohibit states from imposing taxes on transactions conducted over the Internet. If a purchase is made online, it is generally taxed the same as if it was purchased offline.

The real question is whether a retailer is required to collect the tax, which is known as nexus.

Each US state has its own rules when it comes to taxing digital products. For more information on this topic, check out our articles on sales tax for digital goods and sales tax on software as a service (Saas).

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