US Sales Tax Basics for Online Sellers

Not one tax, but thousands

The United States has no single national sales tax. Instead, states, counties, cities, and special districts each set their own rates, which combine into one rate for a given address. That is why the total can differ from one street to the next.

You collect on behalf of the state

When you charge sales tax, you are collecting money you owe to the taxing authority, not keeping it. Getting the rate wrong means you either shortchange the state or overcharge your customer, and both create problems.

Where you owe depends on connection

You are generally required to collect sales tax in places where you have a sufficient connection, historically a physical presence and now often a level of sales. Knowing where you owe is the first real decision.

Accuracy protects you

Sales tax is an area where guessing is risky. Using accurate, current rates by address keeps you compliant and spares you from correcting mistakes later, which is far more painful than getting it right the first time.