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Taxes

Taxes come in many shapes and sizes, depending on the jurisdiction. Indeed, many governments are currently debating what taxes should be applied to Internet transactions and how they should be collected. Although the complexities of tax law are clearly beyond the scope of this book, the following examples illustrate some of the tax-related issues for Internet commerce systems.

Sales Tax in the United States

In the United States, sales tax is owed by purchasers of products to state governments, counties, and localities (cities). In all, there are more than 6,000 rules about sales tax, and they change frequently as governments at all levels change the rules and create new laws. As an additional complication, the tax status of digital goods, called intangible goods by tax specialists, is still under active debate.[2]

[2] One useful discussion of these issues is the article “What Are the Sales Tax Consequences of Retail Marketing on the Internet?” by Scott Walsh, Journal of Multistate Taxation (March–April 1997). Available at http://www.taxware.com/news/art_arch/jmst.htm.


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