Collecting Sales Tax: Some Do, Some Don't


The obligation to pay sales tax is determined by the location of the buyer, 
not the seller. If a business does not have a physical presence in a particular 
state, such as a store or warehouse, it is not required to collect sales tax 
for sales from customers in that state. In legal speak, this connection between 
sales and location is referred to as a "nexus" and was established by the 
U.S. Supreme Court in Quill v. North Dakota, 504 U.S. 298 (1992). 


Exceptions to the Rule


Many big retailers with local stores can sell their products tax free over the 
Internet because they have established separate legal subsidiaries to handle 
Internet business. Put another way, the Barnes & Noble you buy a book from online 
is a different company from Barnes & Noble at the mall. Since the online Barnes 
& Noble doesn't have a physical presence in your state, no sales tax is charged 
for online purchases.