Dear XXXXXXXXXXX,
Thank you for your question.
I need to know if you mean sales tax or income tax?
I also then need to know your state of physical presence? in which state do you actually sit to do the work.
Dear XXXXXXXXXXX.
The state that is your primar residence will be the one that is the state of your physical presence for delivering these services.
It will not matter where you personally sit with regard to this service. With but a few exceptions.
Whether or not these are taxable will be based on the states rules related to taxing of personal services. IN most states, Sales tax is assessed basedon sells of tangible items and use tax for salse of personal services.
So with respect to California:
SERVICES - The sale of services where no tangible personal property is transferred or where the transfer of property is incidental, are not subject to sales and use taxes. Persons providing services are consumers of property used in their business activities. However, persons who engage in service operations are retailers of any supplies or other tangible personal property sold to their customers or clients, and tax applies to gross receipts from such sales. Certain services, however, are defined as sales of tangible personal property. For example, the fabrication of tangible personal property for a consumer is defined as a "sale" even when the consumer provides all the tangible personal property used to fabricate the end product.
(incidentally, Licensed professional services such as what are provided by chiropratiors and physicians are also not sales taxable).
This is by your description there for not sales taxable in California.
There is however a potential for you, in the way you conduct your business to, to establish a Nexus in another state, if you conduct business from that state, to become sales taxable there. A nexus is established in some states by the number of days conducting business from the state. Where you as the sales person are representing your company and making the sale and producing the service, even over the internet, may establish a nexus. So in states where you are physically providing the service, you may need to check their Nexus rules, to find out if the sale is taxable.
Please read the following to understand what I am talking about: http://www.house.leg.state.mn.us/hrd/pubs/nexsitng.pdf
Summary for SALES TAX: California is your state to determine physical place of business (or place of residence). In Califonia you do not charge sales tax on this service. However, for states in which you regularly visit and from which you do business, you will have to verify the Nexus Rules and if you meet the Nexus requirement,then check on that state's sales and use tax law to find out if you would be charging taxes on services. (some states do, i.e. NJ).
For income tax: As a resident of CA you pay income tax on your world wide income regardless of the source. For the remainder of the U.S., you are subject to income tax on income sourced from that state as either a non-resident or part year resident. If in most states you are passing through, and earning money on the internet, much like I am here, you would not have to file a non-resident return or have to worry about it. BUT as soon as you accumulate more than 30 days in anyone year in a state, you have to start looking at the rules regarding taxing of income of non-residents, and that states definition of waht constitutes state sourced income. IN some states it is state sourced if the service is delivered from that state (even if provided over the internet), while in others it would be just sales made to state residents, while you are in the state.
The internet is changing the way states look at taxes, both sales and income taxes. they are changing the way they define nexus for sales and use tax and income tax. IN NJ for example: if you are the business owner, and you are providing a computer in NJ for doing business over the internet for yourself or the employee, to be used from your temporary or primary home in NJ, a nexus is created.
Tax Preparer
GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee