[loxly]

Are ebooks and other software downloads subject to sales tax? If yes, in which states? That is a whole other area that needs to be aware that they may need to be changing how they do business.

[Convergence]

Yes -

http://forum.abestweb.com/attachment.php?attachmentid=3223&stc=1

[AffiliateHound]

There was a bill introduced in CA last year that would have taxed downloads and more, but it never got out of committee. Music/Entertainment Industries/Lobbies in CA are too powerful to let that happen.

If I remember correctly, Charles Calderon, Co-Sponsor of AB 178 was the sponsor of that bill.

[simcat]

Looks like a digital download tax is being considered in N.C. & Tenn. maybe others too. (I wonder what % of "merchants" on clickbank for example, actually collect the tax they are supposed to? - bet it's pretty small)

If there was a easy way to tax the air we breathe, they would find a way...

[MichaelColey]

That's one of the huge complications of state sales taxes. Different items are taxable in different states. Clothing, groceries, services, etc. The definition of each of those varies considerably. Plus, some of those that do tax clothing have sales tax holidays where they don't tax certain clothing purchases meeting certain criteria for a period of time. Even within a state, what is taxable can vary from municipality to municipality. It's one thing for a huge merchant like Walmart to get a handle on all of that. It's an entirely different matter for a small mom & pop shop.

[loxly]

That's one of the huge complications of state sales taxes. Different items are taxable in different states. Clothing, groceries, services, etc. The definition of each of those varies considerably. Plus, some of those that do tax clothing have sales tax holidays where they don't tax certain clothing purchases meeting certain criteria for a period of time. Even within a state, what is taxable can vary from municipality to municipality. It's one thing for a huge merchant like Walmart to get a handle on all of that. It's an entirely different matter for a small mom & pop shop.
That's my point in the "what merchants need to do" thread (http://forum.abestweb.com/showthread.php?t=117693) . People seem to think that merchants can "easily implement" collecting sales tax. Not so much..... The variables are virtually endless.

[hittjw]

An information product sold as a stand alone home-study is subject to a sales tax, however, if the information product is a deliverable of a service then it does not incur sales tax. This is my understanding for MD and VA.

However, places like Clickbank won't let you sell a service (or even physical product by that matter.) As I understand it (and I'm not a lawyer) you just can't add a membership, you must provide individual service otherwise it's a product.

For example: If you sell an ebook with a membership, the ebook is taxable, the membership is not. If you sell a membership, which gets you an ebook, then no sales tax. If you perform a service and as a result of the service they get an ebook, then no tax.

There is a benefit to paying sales taxes, you can get a sales tax exemption for buying materials that go into the finished product. You don't have finished physical product, or much "cost of goods" for that matter. However, an ebook can be categorized as a sales taxable item.

Best,

Justin