Michigan out of state sales tax

I have an LLC in Michigan and I sell intangible online services through my website. I'm wondering if I should charge out of state sales tax on top of services initial price? In other words, if a customer lives in California purchased a service, do I have to charge a California sales tax? Knowing that my LLC is formed only in Michigan and I'm selling intangible online services.

I'm currently charging 6% sales tax to customers from Michigan, but what about customers from other states?

I'd appreciate it if someone could advice me.

Thank you in advance

 

If your business has no physical presence in a state (storefront, warehouse, office, etc.) you do not have to collect sales tax for that state.

 

As jrbiz said, if you do not have a physical presence in a state (or any affiliates in some states like California), then you are not legally required to collect sales tax (--yet, but states are trying to get that changed). It is the legal obligation of the buyer to pay the sales tax.

The real problem is that if you do collect sales tax, you have to collect the proper amount which can vary based on where the person lives (or possibly has the item delivered). Some cities and regions have different sales tax rates for different things and you would be required to collect based what whatever the tax rate is in that area (for example, Chicago passed a 9% "Netflix tax" on electronically delivered amusements). Nationwide, there are thousands of different sales tax rates. Where I live, the sales tax is higher than in the rest of the state because of a transit sales tax that is added on top of the state sales tax.

That is why many webmasters subscribe to an online tax calculation service. They have people who monitor taxing jurisdictions for changes in tax rates so you do not have to. As of now, it does not seem you have to worry about that.

 

Thank you for your replies, I really appreciate that.

I have a mailbox linked to the business in Michigan, I guess that makes me obligated to charge Michigan sales tax, please correct me if I'm wrong.

I also have a bank account related to the business in California. So, do I have to charge California sales tax because I have a business bank account there?

Best Regards.

 

Not only you can't collect out of state taxes (since you're not licensed there), it's illegal.

I remember this from my ebay days. This article explains: http://www.ebay.com/gds/BEWARE-OF-S...-OF-STATE-SALES-TAX-/10000000002035448/g.html

 

Thank you for the great article!

I'm however a little bit confused now. I read on couple of websites that I have to collect state sales tax if I have a nexus in the state, but I don't know if a mailbox considered as nexus or not!

Examples of Nexus from dor.wa.gov:

• Soliciting sales in this state through employees or other representatives
• Installing or assembling goods in this state, either by employees or other representatives
• Maintaining a stock of goods in this state
• Renting or leasing tangible personal property
• Providing services
• Constructing, installing, repairing, maintaining real property or tangible personal property in this state
• Making regular deliveries of goods into Washington using the taxpayer's own vehicles

They didn't mention a mailbox in the examples. However, I guess point number 4 applies to me but I can't confirm: Renting or leasing tangible personal property

I'm paying a monthly fee to a company in Michigan for the mailbox, so does that makes me having a nexus and obligated to pay Michigan sales tax?

Also, maintaining a business bank account in California makes me obligated to pay California sales tax or not?

I hope someone can shed some light on this.

Thank you in advance.