This question deals with the issue of sales tax. When I was getting ready to publish my app I wondered about a lot of questions relating to sales tax.
- Am I supposed to charge the user sales tax and then turn it in?
- Is there even sales tax for app sales?
- Does Google, Apple, or Amazon take care of it for me?
After reading some FAQ’s and documentation from Google’s website the answer is essentially “It’s not our problem, it’s yours”. If there is sales tax to charge you are in charge of being aware and charging it and remitting payment. It is completely up to you.
Here is a snippet from Google’s site “You are solely responsible for specifying your own tax rates and for updating them if tax rates for your location change. Google won’t apply taxes to your orders if you don’t provide any tax information in the Merchant Center or via the Checkout API, so be sure to keep this information up-to-date. For tax assistance, please consult with a qualified tax professional.” (Google – Charging tax).
But for Amazon and Apple, they will take care of the sales tax for you if they deem it is necessary for your situation. This is typically determined based on the address that you are purchasing with. On Amazon’s site they say “Items sold by Amazon.com LLC, or its subsidiaries, and shipped to destinations in the following states are subject to tax:” and then they list Kansas, Kentucky, New York, North Dakota, Texas, and Washington. (Amazon – Sales Tax Requirements) I have tested this out since I live in Texas by purchasing my own app. I was charged sales tax but in my reporting dashboard it only reports the sale of $0.99. Apple is the same way; they take care of sales tax for you. Their site says “Your total price will include the price of the product plus any applicable sales tax; such sales tax is based on the bill-to address and the sales tax rate in effect at the time you download the product. We will charge tax only in states where digital goods are taxable.” (Apple – Terms and Conditions)
So in the end, do you have to worry about sales tax? Google – Yes, Amazon – No, Apple – No.
I am hesitant to list exactly how you file and pay sales tax on this website since that is changing constantly. I read somewhere that sales tax laws haven’t really caught up to the internet and digital sales (like apps or music). If you go online you can read a lot of information about amazon and the sales tax battles they are having. Either way this area is in a state of constant flux and I recommend checking out the following site to make sure you are up to date; IRS – Taxes – State Links.
- Onstartups – Taxes for Android / iPhone developers?
- Money – StackExchange – What is the proper way to report additional income for taxes (specifically, Android development)?
- MacRumors – Why do they charge tax on apps?
- iPhone Dev SDK – Once again, about VAT and international Sales Tax
- OnStartUps – Who handles sales tax on apps (android on google play, ios on appstore, android on amazon app store)?
- About – How To Collect, Report, and Pay State Sales Taxes
- Window on State Government – Taxes Sales Tax FAQ
- Wikipedia – Sales Tax