Use tax for out of state sales
In recent years, most states have stepped up their attempts to
require out-of-state retailers like EBay store operators and
telemarketers to register for the purpose of collecting their
use taxes.
The good news about use tax
Unless you have a 'physical presence' in a state, you can
legally avoid registering for and paying its use tax.
A state's taxing power extends only as far as it borders. A
state cannot force you to pay its taxes unless you do something
in its borders. And for all you eBay sellers out there, simply
selling merchandise to residents of a state does not qualify as
having a 'physical presence' in your customer's state.
Accounting lingo
The Supreme Court of the United States has ruled that you must
engage in a minimal level of physical activity within a state in
order to establish a connection. Making sales in a state, via
internet or mail order is not enough activity to establish a
connection.
What will make a connection?
You may be required to register for and pay use tax if you:
1. Maintain an office, store, or other business facility in the
state.
2. One of your employees (or you) enters the state to take
orders, perform services, or otherwise do business on your
behalf.
3. Real property that you own or lease is located in the state.
4. Personal property that you own or lease is stored or used in
the state on a more than occasional basis.
Basically if you limit your contact to mail, email, and
telephone you shouldn't be required to register for, collect or
pay a states use tax.
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