Assuming you are in a jurisdiction that imposes sales tax, these are the steps you would take to see if you need to charge sales tax:
➢ First you will have to see if the state has origin based taxation or destination based taxation. Origin based is where the product or service is produced and destination based is where it is consumed.
➢ Next see if what you are selling is even taxable. Which goods or services are considered taxable will vary from state to state.
➢ Next, find out if you are selling goods, a service, or a combination of the two. The majority of states levy sales tax on tangible personal property as well as the services that install, repair, alter or maintenance those goods. Many states use what is called the “True Objects Test” to distinguish if a business sells a product, service or both. In other words what is the true purpose of the business? An example would be if a lawyer draws up a power of attorney for a client, would that be the service of creating a legal document or the price of the document as tangible property (paper) sold? This will vary from state to state.