US sales tax for digital service sales: a tax management guide

The United States has possibly the world’s most complex sales tax regime. This is because each state sets its own sales tax rules, and states often take widely varying approaches. As a result, every state has a different tax framework, with variations in regulation covering everything from tax liability and tax rates to exemption categories and reporting requirements. On top of this, local area tax jurisdictions also have powers over some aspects of taxation and can set different rules for their area.

If you sell digital services into multiple US states, what does this complex landscape mean for your day-to-day sales tax management?

In this guide, we explain key background information and discuss core compliance issues, so you can assess the practical implications for your business.

This guide will cover some of the following topics:

Establishing if you have nexus – physical and economic
Determining taxability of products and services
Use tax notification and reporting
The practical implications of selling into multiple US states
Reporting for US taxes