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Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 377
Experience:  Former IRS Revenue Agent
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I am in the process of selling a domain name to a company. I

Customer Question

I am in the process of selling a domain name to a company. I am an individual and not part of a company. How will I pay the taxes on the sale? Can I charge the customer the tax?
Submitted: 2 months ago.
Category: Tax
Expert:  Dr. Fiona Chen replied 2 months ago.

Dear Customer,

1) Mostly likely, the only type of tax you charge the customer is the sales tax. You need to check with your resident state, Texas, and the other party's register company state(s) to see whether you need to pay and withhold sales tax on the sale of the domain name. Call the Department of Revenue, Sales and Excise Tax Department, of each state to verify. Document the date, time and the person you talk with.

2) When you have sales proceeds, you may need to file income tax return in each of the states they register, or at least the state they register as the domestic business. The buyer should issue you a 1099 for 2016 in the beginning of next year for you to file the tax return(s) with. Even without the 1099, you need to report income to each state applicable. Think it this way. You earned income from that state by selling the domain name to that state.

We cannot withhold income tax we owe from our customer.

3) This is a commercial and business dealing. It could be considered as a royalty and/or intellectual property sale. It is a specialty business area. You may want to consider retain a local legal counsel practicing in the area and pay the person to review your contract, price, and represent you in the transaction.

Please feel free to follow up.

Regards,

Fiona

Fiona Chen, MPA, Ph.D., CPA, ABV, CFF