California Enforces Online Sales Tax, But Most Subscription Sites Selling Online Content Do Not Have to Collect

This Saturday, Sept. 15, 2012, California will begin enforcing its online sales tax law. That means that eCommerce retailers with more than a million

This Saturday, Sept. 15, 2012, California will begin enforcing its online sales tax law. That means that eCommerce retailers with more than a million in sales in California will have to collect sales tax from customers. (Interestingly, this has led to a buying frenzy on Amazon by some California residents.)But most websites selling online subscriptions for digital content or access shouldn’t be affected.That’s because the law applies to “tangible personal property.” Sales and Use tax laws in most states already exclude newspaper and periodical subscriptions in print, so digital content is automatically excluded. (In New York, sites offering real estate listings or other “information” (vs. news) would be subject to sales tax, but California excludes all digital downloads and distribution of content as “intangible” products.)But, if you ship your subscribers a physical product — such as a report, book, or other tangible item — you may also have to start collecting sales tax — but again, only in California if your sales for those tangible, non-periodical products exceed $1 million a year.Our sister site, Subscription Site Insider, has a handy Sales Tax Primer that also lists the sales tax rate by state and gives a case study example of how different types of subscription sites (news, dating, educational, membership) would have to comply with sales tax laws when selling subscriptions to residents of New York.Check it out and then consult your CPA to find out if your content and sales revenues mandate you to start collecting sales tax in California — or any of the other states with online sales tax laws:

  • Kansas
  • Kentucky
  • New York
  • North Dakota
  • Pennsylvania
  • Texas
  • Washington

And be advised that other states will be implementing online sales tax laws in the near future:

  • New Jersey – July 2013
  • Virginia – September 2013
  • Indiana – January 2014
  • Nevada – January 2014
  • South Carolina – January 2016

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