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a question about US states sales taxes. IN a sale of virtual software whereas the client is downloading from an app store...why is there no nexus formed by the

a question about US states sales taxes. IN a sale of virtual software whereas the client is downloading from an app store...why is there no nexus formed by the owner of the app store but just the independent dev selling the software? For example, why is the only nexus formed my state of Indiana(ie my location) and not Google's app store location?

dangrossman 13y ago
The location of the developer should be irrelevant and have no bearing on where the app stores collect taxes. The developer is not a party to the transactions between Apple/Google and the device owners buying apps. Apple/Google do collect and remit sales tax from customers in states they have nexus in that have a tax on digital goods (almost half of them).
- fidotron 13y ago
  Not quite, or it might have changed, but when the Play Store started there was a good deal of confusion about who the merchant of sale was. This is one of the excuses they used to have for why developers got such a frightening amount of information about anyone buying stuff from them.
  - dangrossman 13y ago
    I can't imagine how they get away with that if so. The answer to all the relevant questions (where do people go to buy apps? who do they give their credit card to? what merchant actually charges their card? who handles refunds? who holds the copy of the product before it's transferred to the buyer? who delivers the product?) is all Google/Apple, not the developer. This is as if a B&M store like Staples decided Intuit was responsible for tallying its own sales tax whenever the store sold a copy of Quickbooks.
    - fidotron 13y ago
      iirc, and my memory is hazy, it was to do with them reusing Google Checkout. The result was a mismatch between what would make sense were you running an online store of physical items and what you want to run a store of digital goods.
- rbritton 13y ago
  I don't have a source, but I remember reading that Apple's App Store revenue is classified as a commission to developers. As part of their 30% cut they have to deal with all of the sales tax.
  - deleted 13y ago
    [deleted]
gamblor956 13y ago
Traditionally, in state and international tax jurisdiction situations, the taxable jurisdiction of a sale is the jurisdiction in which the client/customer sits. However, jurisdiction may also extend to the jurisdiction of the seller (or even to a third jurisdiction) if the sale was negotiated and executed/agreed to outside of the customer's jurisdiction. So in a nutshell...you shouldn't have nexus just because you sell on Google Play...but if you're really worried about it you should consultant with a lawyer or an accountant (because for some reason accountants can opine on tax law). Why is there no nexus formed by the owner of the app store but just the independent dev selling the software? For example, why is the only nexus formed my state of Indiana(ie my location) and not Google's app store location? That's not the case, whatever Google claims. Google is trying to claim to be just a service provider for your sale (i.e., just facilitating the transaction) but the store TOS, its policies, and Google's actions demonstrate that Google is acting more like a retail store than a sales service provider. Legally, and especially in the tax world, this makes a tremendous difference. (This ridiculous stance is also why Google Play's international market availability (in terms of countries) is so much smaller than the Apple or Microsoft store. Google knows its claims won't fly in most countries, so it has to stay out of those countries to avoid very significant fines and penalties.)

dangrossman 13y ago

The location of the developer should be irrelevant and have no bearing on where the app stores collect taxes. The developer is not a party to the transactions between Apple/Google and the device owners buying apps. Apple/Google do collect and remit sales tax from customers in states they have nexus in that have a tax on digital goods (almost half of them).

fidotron 13y ago
Not quite, or it might have changed, but when the Play Store started there was a good deal of confusion about who the merchant of sale was. This is one of the excuses they used to have for why developers got such a frightening amount of information about anyone buying stuff from them.
- dangrossman 13y ago
  I can't imagine how they get away with that if so. The answer to all the relevant questions (where do people go to buy apps? who do they give their credit card to? what merchant actually charges their card? who handles refunds? who holds the copy of the product before it's transferred to the buyer? who delivers the product?) is all Google/Apple, not the developer. This is as if a B&M store like Staples decided Intuit was responsible for tallying its own sales tax whenever the store sold a copy of Quickbooks.
  - fidotron 13y ago
    iirc, and my memory is hazy, it was to do with them reusing Google Checkout. The result was a mismatch between what would make sense were you running an online store of physical items and what you want to run a store of digital goods.
rbritton 13y ago
I don't have a source, but I remember reading that Apple's App Store revenue is classified as a commission to developers. As part of their 30% cut they have to deal with all of the sales tax.
- deleted 13y ago
  [deleted]

gamblor956 13y ago

Traditionally, in state and international tax jurisdiction situations, the taxable jurisdiction of a sale is the jurisdiction in which the client/customer sits. However, jurisdiction may also extend to the jurisdiction of the seller (or even to a third jurisdiction) if the sale was negotiated and executed/agreed to outside of the customer's jurisdiction. So in a nutshell...you shouldn't have nexus just because you sell on Google Play...but if you're really worried about it you should consultant with a lawyer or an accountant (because for some reason accountants can opine on tax law). Why is there no nexus formed by the owner of the app store but just the independent dev selling the software? For example, why is the only nexus formed my state of Indiana(ie my location) and not Google's app store location? That's not the case, whatever Google claims. Google is trying to claim to be just a service provider for your sale (i.e., just facilitating the transaction) but the store TOS, its policies, and Google's actions demonstrate that Google is acting more like a retail store than a sales service provider. Legally, and especially in the tax world, this makes a tremendous difference. (This ridiculous stance is also why Google Play's international market availability (in terms of countries) is so much smaller than the Apple or Microsoft store. Google knows its claims won't fly in most countries, so it has to stay out of those countries to avoid very significant fines and penalties.)