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Do I charge sales tax from purchaser from other states if I set up LLC at Delaware and run e-com store?

Dover, DE |

for e.g: customer buy product from my e-com store from Ohio and I set up LLC at elaware, do I charge sales tax?

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Attorney answers 2


I can provide you a general answer, with the caveat that this is an area of law that is in flux. First, is your Delaware LLC operating in Delaware, or are you organized in Delaware and operating elsewhere. You will have to collect sales tax if you sell goods in the state where you do business. Of course, if you are doing business in Delaware, you have no sales tax so it is a moot issue.

Generally speaking, you do not need to collect sales tax when selling out of state. The buyer of products should pay the state a "use tax" in lieu of a sales tax, but few consumers pay the tax in reality. There has been some pressure in Congress to force web based retailers to collect sales tax from customers in the various states in which they sell.

In sum, you are not likely to have to collect sales tax from persons outside of Delaware who buy your products.


Mr. Sprang has provided you with excellent advice.

The states have had a great deal of difficulty in collecting sales taxes on internet-based sales mainly because such businesses do not have a sufficient presence (or nexus) in most of the states in which they sell goods to consumers for sales tax liability to arise. For that reason, the internet has caused many high-overhead "brick and mortar" stores with locations throughout the U.S. (i.e., Best Buy, Barnes & Noble, and formerly Circuit City) to be placed at a competitive disadvantage vis-a-vis e-commerce businesses because only the former entities are required to charge sales taxes. Congress is presently considering the Marketplace Fairness Act ("MFA") to level the playing field between brick and mortar stores and larger e-commerce businesses (with gross annual sales of $1 million or more), by allowing states to collect sales taxes from the latter entities when they make sales to consumers in states that impose a sales tax. This bill easily passed in the Senate earlier this year but it is facing considerable difficulty in the House. I have also read that Speaker John Boehner is opposed to the MFA, so the bill may not even make it onto the House floor for a vote. I doubt that anything will happen this year with the MFA because of the lukewarm support it has in the House and the few legislative days left in the year.

Getting back to your specific situation, to the extent that you make sales to customers in Ohio, you will be required to charge Ohio sales taxes on such sales because you have a e-com store in that state, i.e., a sufficient taxable nexus.

Good luck with your business!

The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is licensed to practiced law ONLY in the State of California. Answers to questions from users in other jurisdictions or states are meant to provide only general information. Users should contact a local attorney in their jurisdiction or state to address their specific tax issue.

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